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2013년 3분기 검토보고서 en
 

2013년 3분기 검토보고서 en

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    2013년 3분기 검토보고서 en 2013년 3분기 검토보고서 en Document Transcript

    • HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2013, AND FOR THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012, AND INDEPENDENT ACCOUNTANTS' REVIEW REPORT
    • Deloitte Anjin LLC 9F., One IFC, 23, Yoido-dong, Youngdeungpo-gu, Seoul 150-945, Korea Tel :+82 (2) 6676 1000 Fax :+82 (2) 6674 2114 www.deloitteanjin.co.kr Indepe endent Ac ccountant Review Report ts’ w English T Translation of a Report Orig f ginally Issued in Korean d To the Sh hareholders an Board of Directors of nd Hyundai Card Co., Ltd d.: ng consolidated financial statements of Hyu f undai Card Co Ltd. and its o., We have reviewed the accompanyin condensed c ies ely, pany”). The fi financial statem ments consist of the conden nsed consolida statement ated t subsidiari (collective the “Comp of financi position as of September 30, 2013, an the related condensed consolidated sta ial s nd atements of co omprehensive income fo the three m or months and nin months end September 30, 2013 and 2012, the rel ne ded r d lated condense ed consolida statement of changes in shareholder equity and the related co ated ts i rs’ d ondensed cons solidated state ements of cash flow for the nine months ended September 3 2013 and 2012, and a su ws e 30, ummary of sig gnificant acco ounting policies a other expl and lanatory inform mation. ment’s respon nsibility for the condensed consolidate financial st t d ed tatements Managem The Com mpany’s manag gement is resp ponsible for th preparation and fair prese he n entation of the accompanying condensed e d consolida financial statements an for such int ated nd ternal control as managemen determines is necessary to enable the nt s t preparatio of condens consolidat financial s on sed ted statements that are free from material mis t m sstatement, wh hether due to fraud or e error. dent accounta ants’ respons sibility Independ Our respo onsibility is to express a con o nclusion on th accompany he ying condensed consolidated financial sta d atements based on our reviews. We condu ucted our revi iews in accord dance with sta andards for rev view of interim financial sta m atements in th Republic he of Korea. A review is l . limited primar to inquirie of company personnel an analytical p rily es y nd procedures applied to financial data, and this provides less assurance tha an audit. We have not pe s an W erformed an au audit, and acco ordingly, we xpress an audit opinion. t do not ex conclusion Review c Based on our reviews, nothing has come to our att n c ttention that ca auses us to believe that the accompanying condense consolidated financial sta ed atements of th Company are not present fairly, in al material res he ted all spects, in accordanc with Korea Internationa Financial S ce an al Standards 1034 Interim Financial Report 4, ting. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/kr/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Member of Deloitte Touche Tohmatsu Limited
    • is Emphasi of matters As explai ined in Note 2 the Compan applied the effect of chan 2, ny nges in accoun nting policy re etrospectively and the y condense consolidated statement of financial pos ed f sition as of De ecember 31, 2012, and the r 2 related conden nsed consolida statement of comprehensive income for the three months and ni months en ated t m ine nded September 30, 2012, the related conde e ensed consolid dated statemen of changes in shareholde equity and the related condensed nt ers’ d c consolida statement of cash flows for the nine months ended September 30, 2012, were restated appl ated t s d 3 e lying the amendme ents. Meanwh hile, our review conclusion i not affected by these mat w is d tters. Others the of osition as of December 31, 2012, and the related D e We have also audited t consolidated statement o financial po ated t , onsolidated st tatement of ch hanges in shar reholders’ consolida statement of comprehensive income, the related co equity an the related c nd consolidated statement of c s cash flows (not presented in the accompan nying condensed consolida financial statements), all expressed i Korean won for the year ended Decem ated a in n, r mber 31, 2012 in 2, accordanc with auditi standards generally acce ce ing g epted in the Republic of Ko R orea. On those consolidated financial e d statement we express an unquali ts, sed ified opinion i our indepen in ndent auditors report dated March 12, 20 In s’ d 013. addition, the restated condensed con nsolidated stat tement of finan ncial position as of Decemb 31, 2012, presented for ber comparat purposes in the accomp tive panying conde ensed consolid dated financial statements, d does not diffe in all er, material r respects, with the audited consolidated st tatement of fin nancial positio as of Decem on mber 31, 2012 2. Novembe 14, 2013 er Notice to Rea aders This repo is effective as of November 14, 2013, the review report date. Cer ort e rtain subseque events or circumstances ent c may have occurred bet e tween the acco ountants’ revie report date and the time the accountan review report is read. ew e nts’ Such even or circums nts stances could significantly affect the acco ompanying co ondensed cons solidated finan ncial statement and may res in modific ts sult cations to the accountants’ review report. r
    • HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES (the “Company”) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2013 AND FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 The accompanying financial statements, including all footnote disclosures, were prepared by, and are the responsibility of, the Company. Chung, Tae Young Chief Executive Officer
    • HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2013, AND DECEMBER 31, 2012 (Unit: Korean won) September 30, 2013 December 31, 2012 ASSETS: CASH AND BANK DEPOSITS (Notes 5, 27 and 28): Cash and cash equivalents Bank deposits Total cash and bank deposits INVESTMENT FINANCIAL ASSETS (Note 28): Financial assets available for sale (“AFS”) Total investment financial assets ₩ 915,886,034,481 33,031,500,000 948,917,534,481 ₩ 791,547,295,193 33,029,000,000 824,576,295,193 1,766,969,764 1,766,969,764 1,766,969,764 1,766,969,764 CARD ASSETS (Notes 6, 7, 25, 26, 27 and 28): Card receivables, net of present value discounts, deferred origination fees and allowance for doubtful accounts Cash advances, net of allowance for doubtful accounts Card loans, net of present value discounts, deferred loan origination fees and allowance for doubtful accounts Total card assets 5,917,119,594,047 814,655,310,891 6,530,709,506,111 906,232,767,098 2,497,903,061,789 9,229,677,966,727 2,270,095,402,706 9,707,037,675,915 PROPERTY AND EQUIPMENT (Notes 8, 10 and 13): Land Buildings, net of accumulated depreciation Vehicles, net of accumulated depreciation Fixtures and equipment, net of accumulated depreciation Finance lease assets Construction in progress Total property and equipment 122,011,816,788 72,841,456,005 42,847,827 50,890,758,258 555,668,252 28,280,368,714 274,622,915,844 122,011,816,788 60,330,598,734 163,464,977 56,690,437,564 1,389,170,627 23,797,602,168 264,383,090,858 OTHER FINANCIAL ASSETS (Notes 5, 7, 17, 27 and 28): Other accounts receivable, net of allowance for doubtful accounts Accrued revenue, net of allowance for doubtful accounts Guarantee deposits Derivative assets Total other financial assets 88,610,557,040 45,203,048,323 35,066,295,177 2,513,111,687 171,393,012,227 85,387,050,368 43,654,761,801 52,348,673,218 901,423,501 182,291,908,888 9,910,039,513 46,263,421,666 111,831,434,907 142,579,019,579 2,666,030,832 313,249,946,497 ₩10,939,628,345,540 11,254,701,307 48,279,724,993 74,664,032,134 135,666,642,303 2,342,574,040 272,207,674,777 ₩11,252,263,615,395 OTHER NON-FINANCIAL ASSETS (Notes 7, 9, 23 and 26): Advanced payments, net of allowance for doubtful accounts Prepaid expenses Intangible assets Deferred income tax assets Others Total other non-financial assets Total Assets (Continued)
    • HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED) AS OF SEPTEMBER 30, 2013, AND DECEMBER 31, 2012 (Unit: Korean won) September 30, 2013 December 31, 2012 LIABILITIES AND SHAREHOLDERS’ EQUITY: BORROWINGS: Borrowings (Notes 11, 27 and 28) ( Bonds payable, net of discounts on bonds (Notes 12, 27 and 28) Total borrowings ₩ 285,000,000,000 487,500,000,000 ₩ 6,403,902,549,696 6,688,902,549,696 6,533,175,825,125 7,020,675,825,125 17,721,333,027 17,721,333,027 10,695,054,186 10,695,054,186 1,066,263,643,626 122,808,432,326 153,891,747,753 592,178,575 42,840,883,487 8,674,002,020 1,395,070,887,787 1,186,714,518,145 123,824,521,370 139,353,829,793 1,452,239,137 53,554,957,780 12,776,716,986 1,517,676,783,211 OTHER NON-FINANCIAL LIABILITIES (Notes 15, 16, 24 and 26): Withholdings Unearned revenue Provisions Current tax liability Total other non-financial liabilities 8,102,396,099 401,748,170,053 82,605,595,367 20,666,075,185 513,122,236,704 6,968,385,070 397,830,493,299 75,687,285,760 30,439,361,053 510,925,525,182 SHAREHOLDERS’ EQUITY : Share capital (Note 18) Capital surplus (Note 18) Retained earnings (Notes 2, 19 and 21) Reserves (Notes 2 and 20) Non-controlling interest Total shareholders’ equity Total Liabilities and Shareholders’ Equity 802,326,430,000 57,704,443,955 1,475,947,774,108 (11,187,129,737) 19,820,000 2,324,811,338,326 10,939,628,345,540 802,326,430,000 57,704,443,955 1,348,744,482,014 (16,504,748,278) 19,820,000 2,192,290,427,691 11,252,263,615,395 RETIREMENT BENEFIT (Note 14): Retirement benefit obligation Total retirement benefit OTHER FINANCIAL LIABILITIES (Notes 13, 17, 26, 27 and 28): Accounts payable Withholdings Accrued expenses Finance lease liabilities Derivative liabilities Guarantee deposits received Total other financial liabilities ₩ ₩ (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, 2013 AND 2012 (Unit: Korean won) 2013 Three months ended September 30. 2012 Nine months ended September 30. Three months ended September 30. Nine months ended September 30. OPERATING REVENUE: Card income (Notes 26, 28 and 30) ₩ 615,503,498,368 ₩1,823,716,549,587 ₩ 596,675,846,452 ₩ 1,779,519,921,306 Interest income (Notes 28 and 29) Gain on disposal of financial assets AFS (Note 28) 4,692,125,207 15,213,685,757 6,038,155,839 16,084,879,172 27,064,300 81,187,900 67,000,000 134,000,000 173,175,497 351,635,696 244,701,638 477,523,977 Dividends income Reversal of provision for unused credit limits (Note 16) Other operating revenue (Notes 28 and 31) (51,525,302,219) 36,548,152,029 22,306,481,590 63,102,253,566 Total operating revenue 568,436,710,302 1,875,911,210,969 625,332,185,519 1,859,318,578,021 OPERATING EXPENSES: Card expenses (Notes 26, 28 and 30) 247,601,906,452 767,312,825,052 246,525,489,915 776,087,115,225 76,883,580,431 233,871,902,644 85,961,425,722 259,202,823,496 171,136,895,725 466,803,948,744 156,797,114,339 437,209,790,167 55,939,501 256,953,518 110,229,971 286,096,769 62,065,464,744 176,819,302,743 45,863,667,425 144,050,509,724 Interest expenses (Notes 28 and 29) General and administrative expenses (Notes 2, 14, 22 and 26) (433,850,851) - - - Securitization expenses Bad debt expense and loss on disposal of loans Transfer to provision for unused credit limits (Note 16) Other operating expenses (Notes 28 and 31) 1,648,987,106 1,648,987,106 2,694,568,760 4,195,969,575 (48,907,931,140) 58,401,349,462 12,460,817,176 42,129,165,178 Total operating expenses 510,484,842,819 1,705,115,269,269 550,413,313,308 1,663,161,470,134 OPERATING INCOME 57,951,867,483 170,795,941,700 74,918,872,211 196,157,107,887 19,145,368 99,941,180 851,881,861 2,213,659,170 635,794,476 1,520,112,233 52,110,916 147,879,835 48,072,787 151,986,009 Total non-operating income 923,138,145 2,461,480,185 683,867,263 1,675,193,242 NON-OPERATING EXPENSES: Loss from sale of property and equipment 215,433,484 808,977,728 40,341,432 121,936,888 Donations 168,663,961 433,836,151 86,357,896 986,940,234 Total non-operation expenses 384,097,445 1,242,813,879 126,699,328 1,108,877,122 NON-OPERATING INCOME: Gain from sale of property and equipment Rental revenue (Note 26) Miscellaneous gain (Continued) - 3,095,000
    • HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED) FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 (Unit: Korean won) 2013 Three months ended September 30. INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 2 and 23) INCOME FOR THE PERIOD Net income attributable to: Owners of the Company Non-controlling interests Total comprehensive income attributable to: Owners of the Company Non-controlling interests Three months ended September 30. Nine months ended September 30. 172,014,608,006 ₩ 75,476,040,146 ₩ 196,723,424,007 14,603,959,328 43,886,948,855 44,811,315,912 127,203,292,094 17,516,265,154 57,959,774,992 32,651,334,628 164,072,089,379 (59,959,765) 293,944,082 (1,308,437,959) (1,707,291,124) (79,102,593) 19,142,828 387,789,026 (93,844,944) (1,726,171,450) 417,733,491 (2,252,362,961) 545,071,837 4,671,908,118 6,163,467,173 (1,491,559,055) 4,611,948,353 ₩ OTHER COMPREHENSIVE INCOME FOR THE PERIOD (Note 2) Items not reclassified subsequently to profit or loss Remeasurements of net defined benefit liability Income tax effect Items reclassified subsequently to profit or loss Cash flow hedging gains or losses Income tax effect Total other comprehensive income (loss) TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (Note 2) 2012 5,023,674,459 6,604,762,479 (1,581,088,020) 5,317,618,541 (3,020,277,721) (3,992,498,414) 972,220,693 (4,328,715,680) 539,512,646 726,701,495 (187,188,849) (1,167,778,478) 58,490,908,183 Nine months ended September 30. ₩ ₩ 48,498,897,208 ₩ 132,520,910,635 ₩ 53,631,059,312 ₩ 162,904,310,901 ₩ 43,886,948,855 - ₩ 127,203,292,094 - ₩ 57,959,774,992 - ₩ 164,072,089,379 - 132,520,910,635 - 53,631,059,312 - 162,904,310,901 - 48,498,897,208 - (Concluded) See accompanying notes to condensed consolidated financial statements.
    • HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 (Unit: Korean won) Capital surplus Share capital Balance at January 1, ₩802,326,430,000 2012 Changes in accounting policy Restated balance 802,326,430,000 Comprehensive income (loss) Net income Other comprehensi ve income (loss) Acquisition of subsidiaries Balance at September 30, 2012 802,326,430,000 Balance at January 1, 2013 802,326,430,000 Changes in accounting policy Restated balance 802,326,430,000 Comprehensive income (loss) Net income Other comprehensi ve income (loss) Balance at September 30, ₩802,326,430,000 2013 Share premium ₩ 45,399,364,539 45,399,364,539 Other capital Retained earnings ₩12,305,079,416 12,305,079,416 ₩ 1,148,396,655,980 6,049,230,616 1,154,445,886,596 - - 164,072,089,379 - - - - - - Reserves Remeasurem ents of the Cash flow net defined hedging benefit reserves liability ₩(11,764,319,031) (11,764,319,031) - 539,512,646 - 45,399,364,539 12,305,079,416 1,318,517,975,975 (11,224,806,385) 45,399,364,539 12,305,079,416 1,339,725,219,219 (7,485,485,483) 45,399,364,539 12,305,079,416 - - ₩ - - 45,399,364,539 ₩ 12,305,079,416 9,019,262,795 1,348,744,482,014 127,203,292,094 - ₩ 1,475,947,774,108 (7,485,485,483) - ₩ - (6,049,230,616) (6,049,230,616) - (1,707,291,124) - (7,756,521,740) - (9,019,262,795) (9,019,262,795) - Attributable to owners of the Company ₩ 1,996,663,210,904 1,996,663,210,904 Noncontrolling interests ₩ 19,820,000 19,820,000 164,072,089,379 - (1,167,778,478) - - Total ₩ 1,996,683,030,904 1,996,683,030,904 164,072,089,379 (1,167,778,478) 9,910,000 9,910,000 2,159,567,521,805 29,730,000 2,159,597,251,805 2,192,270,607,691 19,820,000 2,192,290,427,691 2,192,270,607,691 19,820,000 2,192,290,427,691 127,203,292,094 - 127,203,292,094 - 5,317,618,541 5,023,674,459 293,944,082 5,317,618,541 ₩ (2,461,811,024) ₩ (8,725,318,713) ₩ 2,324,791,518,326 See accompanying notes to condensed consolidated financial statements. ₩ 19,820,000 ₩ 2,324,811,338,326
    • HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 (Unit: Korean won) Nine months ended September 30, 2013 CASH FLOWS FROM OPERATING ACTIVITIES: Income for the period Income tax expense Interest income Interest expense Dividend received Bad debt expense and loss on disposal of receivables Retirement benefits Depreciation Amortization Loss on foreign currency translation Loss on valuation of derivatives Increase in provision for unused credit limit Increase (decrease) in provision for others Loss from sale of property and equipment Other operating losses Reversal of impairment loss of financial assets AFS Gain on foreign currency translation Gain on valuation of derivatives Amortization of present value discounts of card asset Amortization of deferred origination fees of card assets Gain from sale of property and equipment Other operating gains Changes in working capital: Decrease in card assets Increase in other financial assets Decrease (increase) in other non-financial assets Decrease in derivative assets Decrease in retirement benefit obligations Decrease (increase) in plan asset Decrease in derivative liabilities Decrease in capital lease liabilities Increase (decrease) in other financial liabilities Increase in other non-financial liabilities Cash generated from operating activities: Interest received Interest paid Dividend received Income tax paid Net cash provided by operating activities (Continued) Nine months ended September 30, 2012 ₩ 127,203,292,094 44,811,315,912 (15,213,685,757) 233,871,902,644 (351,635,696) 176,819,302,743 7,482,533,598 21,040,053,626 11,742,939,459 3,561,906,906 1,648,987,106 8,481,816,567 808,977,728 969,812,156 (81,187,900) (3,600,000,000) (14,108,354,577) (14,918,956,773) (99,941,180) (123,414,693) ₩ 164,072,089,379 32,651,334,628 (16,084,879,172) 259,202,823,496 (477,523,977) 144,050,509,724 7,036,423,798 20,059,508,388 10,483,501,883 15,577,385 16,920,500,000 4,195,969,575 (5,975,217,893) 121,936,888 1,520,533,350 (134,000,000) (16,928,592,243) (33,738,751,769) (14,445,419,864) (3,095,000) (161,996,480) 329,116,979,571 (5,564,373,938) 2,071,998,701 (1,816,743,346) 1,764,412,740 (2,121,000,000) (860,060,562) (125,483,605,999) 3,875,924,905 11,252,039,201 (25,405,773,592) (3,003,352,665) 1,865,000,001 (3,471,845,376) (2,921,022,539) (1,971,945,814) (816,734,675) 138,581,999,707 33,558,298,891 15,982,156,562 (217,260,747,497) 351,635,696 (63,171,912,020) 526,830,328,776 18,114,512,272 (241,343,869,709) 477,523,977 (75,832,343,246) 421,463,718,529
    • HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 (Unit: Korean won) Nine months ended September 30, 2013 CASH FLOWS FROM INVESTING ACTIVITIES: Disposal of financial assets AFS Disposal of property and equipment Disposal of intangible assets Net decrease in guarantee deposits Net decrease (increase) in bank deposit Acquisition of property and equipment Acquisition of intangible assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Increase in borrowings Proceeds from issue of bonds payable Acquisition of subsidiaries Repayment of borrowings Repayment of bonds payable Net cash used in financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS, END OF THE PERIOD ₩ 81,187,900 166,042,052 17,324,129,890 (2,500,000) (31,541,231,612) (48,468,452,668) (62,440,824,438) 3,715,000,000,000 2,524,142,398,760 (3,917,500,000,000) (2,661,693,163,810) (340,050,765,050) Nine months ended September 30, 2012 ₩ 134,000,000 3,100,000 1,250,000,000 9,185,111,200 2,500,000 (85,488,616,685) (7,272,376,051) (82,186,281,536) 5,750,000,000,000 2,484,440,702,435 9,910,000 (6,170,000,000,000) (2,341,984,500,000) (277,533,887,565) 124,338,739,288 791,547,295,193 ₩ 61,743,549,428 830,022,903,023 915,886,034,481 ₩ 891,766,452,451 (Concluded) See accompanying notes to condensed consolidated financial statements.
    • HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2013, AND DECEMBER 31, 2012, AND FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 1. GENERAL: Hyundai Card Co., Ltd. (the “Parent”) and its subsidiaries (the “Company”) is engaged in the credit card business under the Specialized Credit Financial Business Law of Korea. On September 15, 1995, the Parent acquired the credit card business of Korea Credit Circulation Co., Ltd., and on September 16, 1995, the Korean government granted permission to the Parent to engage in the credit card business. As of September 30, 2013, the Parent has approximately 7.17 million card members, 2.03 million registered merchants and 165 marketing centers, branches and posts. Its headquarters is located at Yoido, Seoul. As of September 30, 2013, the total common stock of the Parent is ₩802,326 million. The shareholders of the Parent and their respective ownerships as of September 30, 2013, and December 31, 2012, are as follows: September 30, 2013 December 31, 2012 Number of shares % of ownership Number of shares % of ownership Shareholder 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 Republic of Korean won (“Won”) and prepares condensed consolidated financial statements in conformity with Korean statutory requirements and Korean International 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 Company’s 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 Company’s interim condensed consolidated financial statements for the nine months ended September 30, 2013, are prepared in accordance with K-IFRS 1034, Interim Financial Reporting. The Company’s accounting policies applied for the accompanying interim condensed consolidated financial statements are the same as the policies applied for the preparation of condensed 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. 1) Accounting standards and interpretations that were newly applied for the nine months ended September 30, 2013, and changes in the Company’s accounting policies are as follows: Amendment to K-IFRS 1001, Presentation of financial statements: Presentation of Items of Other Comprehensive Income (Revised)
    • -2- The amendments to K-IFRS 1001 require the Company 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 Company’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 Company 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 Company 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 – Offsetting Financial Assets and Financial Liabilities (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 Company discloses the information comparatively (see Note 28 (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 Company’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 Company’s consolidated financial statements and disclosures.
    • -3- 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 Company 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. These enactments referred above do not have a significant effect on the Company’s consolidated financial statements and disclosures. The effects on consolidated statement of financial position and consolidated statement of comprehensive income by accounting standards and interpretations that were newly applied for the nine months ended September 30, 2013, and changes in the Company’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 Retained earnings Reserve Non-controlling interests 860,030,873,955 1,339,725,219,219 (7,485,485,483) 19,820,000 2,192,290,427,691 860,030,873,955 1,348,744,482,014 (16,504,748,278) 19,820,000 2,192,290,427,691 (Consolidated statement of comprehensive income) Operating income Non-operating income Non-operating expenses Income before income tax expenses Income tax expenses Net income for the period Other comprehensive income Items not reclassified subsequently to profit or loss Remeasurements of the net defined benefit liability Income tax effect Items reclassified subsequently to profit or loss Cash flow hedging gains or losses Income tax effect Total comprehensive income for the period For the nine months ended September 30, 2012 Before changes After changes 193,904,744,926 196,157,107,887 1,675,193,242 1,675,193,242 1,108,877,122 1,108,877,122 194,471,061,046 196,723,424,007 32,106,262,791 32,651,334,628 162,364,798,255 164,072,089,379 539,512,646 (1,167,778,478) (1,707,291,124) (2,252,362,961) 545,071,837 539,512,646 539,512,646 726,701,495 726,701,495 (187,188,849) (187,188,849) 162,904,310,901 162,904,310,901
    • -4- 2) The Company 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 (as revised in 2012), Financial Instruments: Presentation The amendments to K-IFRS 1032 clarify existing application issue relating to the offset of financial assets and financial liabilities requirements. The group’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. The Company does not anticipate that these amendments referred above will have a significant effect on the Company’s consolidated financial statements and disclosures. 3. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY: In the application of the Company’s accounting policies, 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. Actual results may differ from these estimates. The application of the Company’s accounting policies and the judgments by management on sources of estimation uncertainty are the same as those of the consolidated financial statements as of December 31, 2012. 4. SUBSIDIARY: Details of the Parent’s subsidiaries as of September 30, 2013, and December 31, 2012, are as follows: Voting share (%) Companies PRIVIA 2nd SPC PRIVIA 3rd SPC Major operation Asset securitization Asset securitization Place of incorporation and operation Korea Korea End of reporting September 30, 2013 December 31, 2012 period 0.9 0.9 December 0.9 0.9 January The subsidiaries were established for the Parent’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 exposes to risks and rewards of them. 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 a control over the changes of provisions and articles of association. By those reasons, 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 to the Parent.
    • -5- 5. RESTRICTED FINANCIAL ASSETS: Restricted financial assets as of September 30, 2013, and December 30, 2012, are as follows (Unit: Won in millions): Type Deposits Other financial assets 6. Entity September 30, 2013 KB and others Shinhan Bank and others Mirae Asset Securities Korea Asset Management Corporation Restriction Guarantee deposits 16 for overdraft December 31, 2012 19 33,000 13 9,246 42,278 33,000 Secured deposits Social enterprise 13 fund 9,246 Escrow account 42,275 CARD ASSETS: Card assets by customer as of September 30, 2013, and December 31, 2012, are as follows (Unit: Won in millions): September 30, 2013 Households Corporates Total CARD ASSETS : 5,424,222 556,235 5,980,457 Card receivables (*) Cash advances 845,787 845,787 2,594,256 Card loans (*) 2,594,256 Total 8,864,265 556,235 9,420,500 Allowance for doubtful (5,152) (190,822) accounts (185,670) 8,678,595 551,083 9,229,678 Book value Composition rate 94.03% 5.97% 100.00% (*) Adjusted for deferred origination fees and present value discounts. Households December 31, 2012 Corporates Total 6,116,731 940,019 2,351,470 9,408,220 479,630 479,630 6,596,361 940,019 2,351,470 9,887,850 (176,050) 9,232,170 95.11% (4,762) 474,868 4.89% (180,812) 9,707,038 100.00%
    • -6- 7. ALLOWANCE FOR DOUBTFUL ACCOUNTS: Changes in the allowance for doubtful accounts for the nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): Card receivables Balance at January 1, 2013 Bad debt expenses Bad debt recovered Disposition and repurchase Provision of (reversal of) allowance for doubtful accounts Balance at September 30, 2013 2,267 - Total 65,652 (1,132) 535 33,786 (394) 730 81,374 (450) 226 - (26,768) (17,526) (26,045) - 25,050 14,536 41,248 - 677 81,511 63,337 31,132 96,353 - 2,944 193,766 Card receivables Balance at January 1, 2012 Bad debt expenses Bad debt recovered Disposition and repurchase Provision of (reversal of) allowance for doubtful accounts Balance at September 30, 2012 Nine months ended September 30, 2013 Cash Card loans Loans Other assets advances - (70,339) Nine months ended September 30, 2012 Cash Card loans Loans Other assets advances 68,773 (1,382) 575 37,910 (362) 845 67,071 (237) 261 - 30 (18,018) (12,084) (13,105) - 12,032 7,129 23,731 - 61,980 33,438 77,721 183,079 (1,976) 1,491 2,306 - Total 176,090 (1,981) 1,681 (43,207) 103 30 42,995 2,409 175,578
    • -7- 8. PROPERTY AND EQUIPMENT: The changes in book value of property and equipment for the nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): Land Buildings Vehicles Fixtures and equipment Finance lease assets Construction in progress Total (*) 23,798 264,383 13,147 32,164 (8,665) (9) (875) (21,040) Ending balance 122,012 72,842 43 50,891 555 28,280 274,623 132 million of construction in progress is reclassified to advanced payments and 123 million of fixtures and equipment is reclassified from construction in progress in intangible assets (see Note 9). Land Buildings Vehicles Fixtures and equipment Finance lease assets Construction in progress Total (*) Nine months ended September 30, 2013 Beginning Acquisition Reclassification(*) Disposal Depreciation balance 122,012 60,331 6,779 7,062 (1,330) 163 (62) (58) 56,690 12,238 1,594 (813) (18,818) 1,389 (834) Nine months ended September 30, 2012 Beginning Acquisition Reclassification(*) Disposal Depreciation balance 83,995 34,166 3,851 42,187 22,819 (3,505) (1,108) 270 76 (108) 57,974 17,396 125 (121) (18,011) 2,500 (833) 472 187,398 11,032 85,489 5,019 5,490 (121) 5,490 million of construction in progress is reclassified from advanced payments. (20,060) Ending balance 122,012 60,393 238 57,363 1,667 16,523 258,196
    • -8- 9. INTANGIBLE ASSETS: The changes in intangible assets for the nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): Development cost Industrial property rights Others Construction in progress Membership Total (*) 76 7,829 30 11,041 20,971 74,664 43,613 96 49,033 (4,384) (123) Ending balance 35,136 - (30) (2,547) 46 5,312 - (11,743) 50,270 21,067 111,831 123 million of construction in progress is reclassified to fixtures and equipment (see Note 8). Development cost Industrial property rights Others Construction in progress Membership Total (*) Beginning balance 34,747 Nine months ended September 30, 2013 Reclassification Acquisition (*) Disposal Amortization 5,294 4,261 (9,166) Beginning balance 36,656 Nine months ended September 30, 2012 Reclassification Acquisition (*) Disposal Amortization 3,538 873 (7,790) 116 11,369 2,101 22,734 72,976 - Ending balance 33,277 - 3,734 7,272 - (30) (2,664) 86 8,705 (1,676) (803) (1,250) (1,250) (10,484) 4,159 21,484 67,711 803 million of construction in progress is reclassified to advanced payments. 10. ASSETS PLEDGED AS COLLATERAL: Land and buildings amounting to 943 million are provided as collateral for leasehold deposit received as of September 30, 2013. 11. BORROWINGS: Borrowings as of September 30, 2013, and December 31, 2012, are as follows (Unit: Won in millions): Commercial Papers Borrowings Borrowed from Shinhan bank and two others Hana bank and seven others Annual interest rates (%) 2.63 3.56–5.55 Maturity 2013.10.04 2013.12.10– 2016.04.01 September 30, 2013 December 31, 2012 60,000 350,000 225,000 285,000 137,500 487,500
    • -9- 12. BONDS PAYABLE: Bonds payable issued by the Company and outstanding as of September 30, 2013, and December 31, 2012, are as follows (Unit: Won in millions): Annual interest rates (%) Short-term debentures 2.91 Current 2.91–6.73, portion of 1M USD long-term LIBOR+0.724 debentures Long-term 2.77–6.75, debentures 1M USD LIBOR+1.5 Discounts on bonds Bonds payable, net Maturity September 30, 2013 Par value Issue price December 31, 2012 Par value Issue price 40,000 40,000 170,000 170,000 1,828,940 2013.11.06 1,828,940 1,707,580 1,707,580 4,542,240 4,542,240 (7,277) 6,403,903 4,665,067 4,665,067 (9,471) 6,533,176 2013.10.05– 2014.09.30 2014.10.06– 2019.07.31 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. 13. FINANCE LEASE LIABILITIES: (1) Lease contract The Company has a three-year finance lease for electronic equipment. The Company 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 555 million and 1,389 million as of September 30, 2013, and December 31, 2012, respectively, and which are set as collateral for finance lease obligation. (2) Finance lease liabilities as of September 30, 2013, and December 31, 2012, are as follows (Unit: Won in millions): September 30, 2013 Minimum lease Present value of payments minimum lease payments 601 592 Less than 1 year 1–5 years Present value discounts (9) 592 Present value December 31, 2012 Minimum lease Present value of payments minimum lease payments 1,202 1,154 301 298 (51) 1,452
    • - 10 - 14. RETIREMENT BENEFIT PLAN: (1) Defined Contribution Plan The expense recognized in the condensed consolidation statements of comprehensive income related to postemployment benefit plan under the defined contribution plan for the nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): September 30, 2013 16 Defined contribution plan September 30, 2012 6 (2) Defined Benefit Plan 1) General The Company operates a defined benefit plan that is linked to final payment. Plan assets mainly consist of deposits and expose to risk of fall in interest rate. 2) Net defined benefit obligation Changes in net defined benefit obligation for the nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): For the nine months ended September 30, 2013 Beginning balance Contributions from the employer Current service cost Interest expense (income) The return on plan assets, excluding amounts included in interest income above Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Transfer of employees between the Company and its related companies Benefits paid Ending balance The present value of the defined benefit obligation 44,474 Plan assets (33,745) National pension fund (34) Net defined benefit obligation 10,695 7,165 - - 7,165 1,113 (812) - 301 - (25) - (25) - - - - (363) - - (363) (472) 2,235 (32,819) - (144) 92 17,721 328 (2,145) 50,572 2 (32)
    • - 11 - For the nine months ended September 30, 2012 The present value of the defined benefit obligation 37,007 - Beginning balance Contributions from the employer Current service cost Interest expense (income) The return on plan assets, excluding amounts included in interest income above Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Transfer of employees between the Company and its related companies Benefits paid Ending balance National pension fund (37) - Plan assets (19,195) (4,500) Net defined benefit obligation 17,775 (4,500) 6,464 - - 6,464 1,117 (550) - 567 (98) (98) - - - - - 2,350 - - (1,102) (2,371) 43,465 603 973 (22,767) - - 2,350 (499) (1,395) 20,664 3 (34) 15. UNEARNED REVENUE: Details of unearned revenue as of September 30, 2013, and December 31, 2012, are as follows (Unit: Won in millions): Customer loyalty program Membership fee Others December 31, 2012 320,328 77,450 52 397,830 September 30, 2013 325,112 76,526 110 401,748 16. PROVISION: Changes in provisions for the nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): September 30, 2013 Beginning Increase Ending Unused commitment 46,386 1,649 48,035 Point 15,509 3,381 18,890 Others 13,792 1,888 15,680 Total 75,687 6,918 82,605
    • - 12 - September 30, 2012 Beginning Increase (decrease) Ending Unused commitment 47,167 4,196 51,363 Point Others 21,826 (8,328) 13,498 11,240 2,353 13,593 Total 80,233 (1,779) 78,454 The above amounts as of September 30, 2013, include provision for deposits in escrow account of 4,944 million, and provision for pending litigations of 10,736 million, in which provision includes deposits in escrow account of 4,467 million (see Note 24(3)). 17. DERIVATIVES AND HEDGE ACCOUNTING: (1) There are no derivative instruments held for trading as of September 30, 2013, and December 31, 2012. (2) Cash flow hedge The Company removes the volatility risk of future cash flow of a hedged item, such as borrowings or bonds, 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 Company’s policies and strategies of cash flow hedge are the same as those as of December 31, 2012. 1) Fair value of cash flow hedge as of September 30, 2013, and December 31, 2012, are as follows (Unit: Won in millions): December 31, 2012 September 30, 2013 Contract Amount Interest rate swap Cross-currency swap Total Asset Liabilities Contract Amount Asset Liabilities 1,173,000 2,513 3,585 778,000 901 3,925 860,480 2,033,480 2,513 39,256 42,841 873,092 1,651,092 901 49,630 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. 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 (Unit: Won in millions): Less than 1 month 1–3 months 3–12 months 1–5 years September 30, 2013 (1,981) (9,885) (21,080) (22,614) (55,560) December 31, 2012 (2,079) (3,881) (25,813) (47,039) (78,812)
    • - 13 - 18. SHARE CAPITAL: There was no change in share capital and capital surplus for the nine months ended September 30, 2013. Meanwhile, Hyundai motor company (“Parent 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%. 19. RETAINED EARNINGS: (1) Details of retained earnings as of September 30, 2013, and December 31, 2012, are as follows (Unit: Won in millions): Legal reserve (*) Reserve for bad loans (see Note 21) Unappropriated retained earnings September 30, 2013 20,143 611,622 844,183 1,475,948 December 31, 2012 20,143 439,031 889,571 1,348,745 (*) 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 for the nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): Beginning Net income attributable to the owners of the Company Ending Nine months ended September 30, 2012 2013 1,348,745 1,154,446 127,203 164,072 1,475,948 1,318,518 20. RESERVES: Changes in reserves for the nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): Nine months ended September 30, 2013 2012 (16,504) (17,813) Beginning Cash flow hedging gains 6,035 928 Interest rate swap 1,419 (3,797) Currency swap 4,616 4,725 Amount reclassified to net income related to cash flow hedge 569 (202) Interest rate swap 531 Currency swap 38 (202) Tax effect related to cash flow hedging gains (losses) (1,581) (187) Remeasurements of the net defined benefit liability 388 (2,252) Tax effect related to remeasurements of the net defined benefit liability (94) 545 (11,187) (18,981) Ending
    • - 14 - 21. RESERVE FOR BAD LOANS: Reserve for bad loans is calculated and disclosed according to Article 11, Supervisory Regulation of Specialized Credit Financial Business. (1) Details of reserve for bad loans as of September 30, 2013, and December 31, 2012, are as follows (Unit: Won in millions): Accumulated reserve for bad loans Expected (reversal of) reserve for bad loans Reserve for bad loans September 30, 2013 December 31, 2012 611,622 439,031 (9,063) 172,591 602,559 611,622 (2) The provision (reversal of) reserve for bad loans and adjusted income after (reversal of) reserve for bad loans for the nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): Net income attributable to the owners of the Company Expected (reversal of) reserve for bad loans Adjusted income after reserve for bad loans Nine months ended September 30, 2012 2013 127,203 164,072 20,701 9,063 143,371 136,266
    • - 15 - 22. GENERAL AND ADMINISTRATIVE EXPENSES: Details of general and administrative expenses for the three months and nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): PAYROLL Salaries wage Pension expenses Employee benefits 2013 Three months Nine months ended ended September 30 September 30 29,317 86,565 2,520 7,482 21,224 6,717 38,554 115,271 2012 Three months Nine months ended ended September 30 September 30 30,380 72,174 2,284 7,037 6,565 21,132 39,229 100,343 2013 Three months Nine months ended ended September 30 September 30 539 1,760 6,911 18,069 3,400 10,543 6,302 18,928 4,507 17,120 135 444 47 172 476 820 22,118 40,820 618 1,856 2 12 262 329 2,524 5,773 1,131 2,794 2012 Three months Nine months ended ended September 30 September 30 571 1,850 4,882 15,871 3,018 9,489 7,118 20,704 4,087 11,789 190 486 24 212 171 613 8,902 28,921 465 1,621 3 14 411 699 2,627 6,142 966 3,237 OTHER EXPENSES Travel expenses Communication expenses Post expense Rental expenses Taxes due Repair and maintenance expenses Insurance premiums Entertainment expenses Advertising expenses Supply expenses Vehicle maintenance expenses Periodical expenses Publication expenses Training expenses Electronic data processing expense Expense for temporary staff Professional expenses Delivery expenses Commission expenses Business activities expenses Depreciation expenses Amortization expenses Event expenses Conference expenses Building administrative expense 12,017 8,808 40,757 580 5,951 938 7,114 4,069 1,759 88 1,530 132,583 32,975 25,542 110,010 2,131 18,722 2,595 21,040 11,743 2,855 411 4,069 351,533 12,438 8,612 41,272 684 6,006 1,125 6,782 3,564 1,958 108 1,584 117,568 28,809 26,818 118,358 2,781 17,945 3,166 20,060 10,484 3,751 305 2,742 336,867
    • - 16 - 23. INCOME TAX FROM CONTINUED OPERATION: (1) Income tax expense for the nine months ended September 30, 2013 and 2012, are summarized as follows (Unit: Won in millions): Nine months ended September 30, Income tax currently payable Changes in deferred tax assets by temporary differences (*) Total Changes in income tax expense reflected directly in shareholders’ equity Income tax expense (*) Ending net deferred tax assets due to temporary differences Beginning net deferred tax assets due to temporary differences Changes in net deferred tax assets due to temporary differences 2013 53,398 (6,912) 46,486 2012 55,048 (22,755) 32,293 (1,675) 44,811 142,579 135,667 (6,912) 358 32,651 135,158 112,403 (22,755) (2) Income tax expenses reflected directly in shareholders’ equity for the nine months ended September 30, 2013, are as follows (Unit: Won in millions): January 1, 2013 Tax effect related to the cash flow hedging reserve gains and losses Tax effect related to remeasurements of the net defined benefit liability Decrease September 30, 2013 2,367 (1,581) 786 2,880 5,247 (94) (1,675) 2,786 3,572 (3) A reconciliation between income before income tax and income tax expense for the nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): Income before income tax Income tax payable by the statutory income tax rates Tax reconciliations: Non-deductible expenses The amount of deductible temporary differences for which no deferred tax asset is recognized True-up adjustment (*) Others Any adjustments recognized in the period due to current tax of prior period Income tax from continued operation Nine months ended September 30, 2012 2013 172,015 196,723 41,166 47,145 372 (123) (269) (20) 3,665 44,811 31 (11,384) (3,463) (2,155) (16,971) 2,477 32,651 (*) True-up adjustment due to difference in the amount disclosed in prior year’s audit report and the actual tax return amount.
    • - 17 - 24. CONTINGENCIES AND COMMITMENTS: Contingencies and commitments are the same as those of the consolidated financial statements as of December 31, 2012, except for the following: (1) Credit line agreement a. The following are credit line agreements as of September 30, 2013, and December 31, 2012 (Unit: Won in millions): Type Overdraft limit Intraday overdraft limit Financial instruments Shinhan Bank and five others September 30, 2013 - December 31, 2012 50,000 360,000 280,000 b. Credit facility agreement The Company entered into a credit facility agreement with GE Capital European Funding & CO (“GECC”) on February 15, 2013. The credit facility limit that can be used by the Company is Euro equivalent of USD100 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. With regard to the credit facility agreement, the Company, GECC, Hyundai Motor Company (“HMC”) and Kia Motors Corp. (“KMC”) entered into a support agreement with same contract period as of the credit facility agreement. Under the support agreement, in case that the Company uses the credit facility line, each of HMC and KMC shall bear an amount equal to 41% and 15% of losses, respectively, which are any amount of obligations that have not been paid to GECC by the Company or otherwise received or collected by GECC from the Company. c. Revolving credit facility agreement The Company has a revolving credit facility agreement with many financial institutions for credit line as of September 30, 2013, as follows (Unit: Won in millions): Financial instruments Kookmin Bank Kookmin Bank Kookmin Bank NH Bank Citibank, Seoul Shinhan Bank Shinhan Bank Shinhan Bank Suhyup Bank Korea Development Bank Hana Bank Standard Chartered Bank Jeonbuk Bank Bank of Nova Scotia Credit line 30,000 130,000 30,000 100,000 50,000 50,000 50,000 50,000 20,000 40,000 100,000 30,000 30,000 50,000 Term 2012-11-07–2013-10-22 2013-02-28–2014-02-28 2013-05-29–2014-05-28 2013-03-29–2014-03-29 2012-12-24–2013-12-24 2013-04-16–2014-04-15 2013-05-31–2014-05-31 2013-06-28–2014-06-28 2013-03-06–2014-03-06 2013-04-19–2014-04-19 2013-02-01–2014-02-01 2013-04-19–2014-04-19 2013-05-28–2014-05-28 2013-07-18–2014-07-18 (2) Pending lawsuits As of September 30, 2013, the Company is involved in 36 cases ( 132,351 millions) as a defendant and 109 cases ( 12,161 millions) as a plaintiff in the pending lawsuits. The management of the Company does not anticipate that these pending lawsuits referred above will have a significant effect on the Company’s consolidated financial statements.
    • - 18 - (3) Deposit for loss reimbursement As of September 30, 2013, the Company 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 16). (4) Guarantee The Company has a performance guarantee from the Seoul Guarantee Insurance Co., Ltd., amounting to 392 million in connection with deferred transportation payment card and others. (5) Contract of sale of receivables The Company 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 Company 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. 25. TRANSFERS OF FINANCIAL ASSETS: The Parent 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 Parent has retained substantially all the risks and rewards of ownership of the transferred asset. Therefore, the Parent continues to recognize the transferred financial assets in the separate financial statements. The details of ABSs and underlying assets as of September 30, 2013, and December 31, 2012, are as follows (Unit: Won in millions): PRIVIA 2nd SPC PRIVIA 3rd SPC Discounts on bonds PRIVIA 2nd SPC PRIVIA 3rd SPC Discounts on bonds Maturity 2014.04.21 2015.07.20 Maturity 2014.04.21 2015.07.20 As of September 30, 2013 Carrying amount Fair value Underlying Senior Underlying Senior asset tranche asset tranche 1,230,242 430,240 1,256,281 430,206 1,208,971 430,240 1,237,238 429,738 (2,075) 858,405 2,493,519 859,944 2,439,213 Net position 826,075 807,500 1,633,575 As of December 31, 2012 Carrying amount Underlying Senior Underlying asset tranche asset 1,055,990 428,440 1,074,693 1,038,539 428,440 1,058,068 (3,589) 853,291 2,132,761 2,094,529 Net position 646,533 630,117 1,276,650 Fair value Senior tranche 428,160 427,951 856,111
    • - 19 - 26. TRANSACTION WITH RELATED PARTIES: (1) Status of related parties Related parties consist of entities related to the Company, 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 related parties as of September 30, 2013, are as follows: Companies Hyundai Motor Company GE Capital Int'l Holdings, Green Air, Kia Motor Company, Kia Tigers, Busan Finance Center AMC, Samwoo, WIA Magna Powertrain, Eukor Car Carriers, Innocean, Iljin Bearing, Jongro Academy, Chunbuk Hyundai motors FC, Jongro Eclass, Hyundai Kefico, Korea Credit Bureau, Hankook Economy News, Haevichi Country Club, Haevichi Hotel & Resort, Hyundai construction, Hyundai construction human resource development center, Hyundai Glovis, Hyundai Dymos, Hyundai City Corporation, Hyundai Life Insurance, Hyundai Rotem, Hyundai Materials, Hyundai Metia, Hyundai Movis, Hyundai BNG Steel, Hyundai farm land & development, Hyundai Steel Company, Hyundai C&I, Hyundai IHL, Hyundai energy, Hyundai engineering, Hyundai NGV, Hyundai MSEAT, Hyundai MnSoft, Hyundai AMCO, Hyundai Auto Ever Systems, Hyundai Wistco, Hyundai Wia, Hyundai Engineering & Steel Industries, Hyundai Architects & Engineers Associates, Hyundai Motors Electronic Industry, Hyundai Capital, Hyundai Commercial, Hyundai Powertech, Hyundai Partecs, Hyundai Hysco, HK Saving Bank and HMC Investment Securities Parent company Other related parties (2) Transaction with related companies for the nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): Nine months ended September 30, 2013 Other related Parent Total parties company Revenues Card revenue Rental revenue Others Expense Card expense General and administrative expense Others Others Purchase of property and equipment Purchase of intangible assets Disposal of assets Total Nine months ended September 30, 2012 Parent Other related Total company parties 97,670 97,670 59,277 616 22,241 82,134 156,947 616 22,241 179,804 78,095 78,095 41,351 196 28,946 70,493 119,446 196 28,946 148,588 - 30,688 30,688 15 209 224 37,474 38,916 107,078 37,626 38,997 107,311 305 69 389 27,189 41,820 69,218 27,494 41,889 69,607 20,249 20,249 76 13,675 13,751 - 27,060 27,060 - 2,400 2,400 - 280,151 327,460 280,151 327,460 - 268,773 284,848 268,773 284,924 152 81 233 - 76
    • - 20 - (3) Outstanding receivables, payables and guarantee from transactions with related parties as of September 30, 2013, and December 31, 2012, are as follows (Unit: Won in millions): September 30, 2013 Other Parent related company Total parties Receivables Card asset Others Allowance for doubtful accounts Total Payables Accounts payable Other Total 72,856 2,128 185,738 3,375 258,594 5,503 (801) 74,183 (2,043) 187,070 (2,844) 261,253 59,237 23 59,260 29,672 (4,239) 25,433 88,909 (4,216) 84,693 December 31, 2012 Other Parent related Total company parties 64,580 151 147,800 21,626 212,380 21,777 (710) 64,021 (1,626) 167,800 (2,336) 231,821 87,354 7 87,361 58,060 (5,489) 52,571 145,414 (5,482) 139,932 The Company is being provided payment guarantees to GECC through credit facility agreement by HMC and KMC (see Note 24(1)). (4) Granting of credit with related parties Granting of credit with related parties as of September 30, 2013, is as follows (Unit: Won in millions): Grantor Parent Hyundai Capital Services, Inc. Grantee Hyundai Capital Services, Inc. Method Credit limit Period Call loan 300,000 2012.11.1–2013.10.31 Parent Call loan 300,000 2012.11.1–2013.10.31 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. (5) Compensation for key management 1) Compensation cost for key management for the nine months ended September 30, 2013, consists of short-term employee benefit and retirement benefit. 2) Compensation for key management for the nine months ended September 30, 2013 and 2012, consists of the following (Unit: Won in millions): Short-term employee benefit Retirement benefit Total For the nine months ended September 30 2013 2012 5,359 4,391 1,806 1,507 6,197 6,866 3) Key management includes directors (including non-executive directors) and members of the audit committee with significant authority and responsibility over the Company’s plan, direction and control.
    • - 21 - 27. FINANCIAL RISK MANAGEMENT: (1) General The Company 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 Company and its risk management policy and procedures are outlined below. The Company’s risk management strategy is the same as that of 2012. (2) Credit risk 1) Level of exposure to credit risk The Company’s maximum exposure to credit risk as of September 30, 2013, and December 31, 2012, is summarized as follows (Unit: Won in millions): September 30, 2013 December 31, 2012 948,918 824,576 Deposit Card asset (*1) 9,420,500 9,887,850 Other assets (*1, 2) 173,680 184,554 Unused commitment 32,636,871 32,974,864 43,179,969 43,871,844 Total (*1) Card asset is stated at book value before allowance for doubtful accounts. (*2) Other assets consist of accounts payable, unearned income and others. 2) Analysis of credit soundness of financial assets Credit soundness of card assets neither past due nor impaired as of September 30, 2013, and December 31, 2012, is summarized as follows (Unit: Won in millions): December 31, 2012 September 30, 2013 Book value before allowance for doubtful accounts Retail Card receivables and cash advances Card loans Corporate Card receivables Total Allowance for doubtful accounts Book value Book value before allowance for doubtful accounts Allowance for doubtful accounts Book value 6,123,495 2,446,785 (78,767) (60,514) 6,044,728 2,386,271 6,914,575 2,238,022 (83,591) (54,810) 6,830,984 2,183,212 522,641 (2,653) 519,988 450,389 (1,905) 448,484 9,092,921 (141,934) 8,950,987 9,602,986 (140,306) 9,462,680
    • - 22 - Credit quality of card assets past due but not impaired as of September 30, 2013, and December 31, 2012, is summarized as follows (Unit: Won in millions): September 30, 2013 More than 3 months - Less than 1 month 197,412 9,905 207,317 Retail Corporate 1–2 months 27,619 6,840 34,459 104,766 27,424 75,127 207,317 17,180 5,320 11,959 34,459 - - 121,946 32,744 87,086 241,776 (7,937) 199,380 (2,627) 31,832 - - (10,564) 231,212 Card assets Card receivables Cash advances Card loans Allowance for doubtful accounts Book value 2–3 months - Total 225,031 16,745 241,776 December 31, 2012 More than 3 months - Less than 1 month 173,994 13,485 187,479 Retail Corporate 1–2 months 29,994 2,653 32,647 110,097 18,102 59,280 187,479 16,497 4,378 11,772 32,647 - - 126,594 22,480 71,052 220,126 (7,051) 180,428 (2,879) 29,768 - - (9,930) 210,196 Card assets Card receivables Cash advances Card loans Allowance for doubtful accounts Book value 2–3 months - Total 203,988 16,138 220,126 Impaired card assets as of September 30, 2013, and December 31, 2012, are summarized as follows (Unit: Won in millions): September 30, 2013 December 31, 2012 85,803 64,738 Card assets Allowance for doubtful accounts (38,324) (30,576) 47,479 34,162 Total 3) Concentrations of credit risk Concentrations of credit risk by industry of corporate loans as of September 30, 2013, and December 31, 2012, are summarized as follows (Unit: Won in millions): September 30, 2013 Book value before allowance for doubtful accounts Financing Manufacturing Service Public Others Total 128,737 191,727 159,511 69 76,191 556,235 Ratio 23.14% 34.47% 28.68% 0.01% 13.70% 100.00% Allowance for doubtful accounts (284) (1,639) (1,804) (1,425) (5,152) December 31, 2012 Book value 128,453 190,088 157,707 69 74,766 551,083 Book value before allowance for doubtful accounts 121,927 161,781 149,343 145 46,434 479,630 Ratio 25.42% 33.73% 31.14% 0.03% 9.68% 100.00% Allowance for doubtful accounts (219) (863) (1,997) (1,683) (4,762) Book value 121,708 160,918 147,346 145 44,751 474,868
    • - 23 - (3) Liquidity risk The Company’s financial liabilities by residual contractual maturity as of September 30, 2013, and December 31, 2012, are classified as follows (Unit: Won in millions): Borrowings Bonds payable Derivatives liabilities Other liabilities Total Immediate payment 58,611 58,611 September 30, 2013 Less than More than 1–5 years 1 year 5 years 220,858 73,178 2,084,120 4,792,147 96,579 33,296 24,976 1,292,949 779 3,631,223 4,891,080 96,579 Total 294,036 6,972,846 58,272 1,352,339 8,677,493 These amounts include all cash inflows, such as interests without discount and other liabilities are composed of accounts payable, accrued expense, deposit received, finance lease liabilities and guarantee deposit received. Borrowings Bonds payable Derivatives liabilities Other liabilities Total Immediate payment 42,139 42,139 December 31, 2012 Less than More than 1–5 years 1 year 5 years 429,738 64,417 2,108,561 4,801,662 230,914 32,147 47,682 1,421,832 192 3,992,278 4,913,953 230,914 Total 494,155 7,141,137 79,829 1,464,163 9,179,284 These amounts include all cash inflows, such as interests without discount and other liabilities are composed of accounts payable, accrued expense, deposit received, finance lease liabilities and guarantee deposit received. (4) Market risk The result of interest rate Value at Risk (VaR) calculated under normal distribution of interest rate risk as of September 30, 2013, and December 31, 2012, is as follows (Unit: Won in millions): September 30, 2013 December 31, 2012 6,502 1,197 Interest rate VaR (5) Capital management The Parent (specialized credit finance company) must maintain adjusted capital adequacy ratio in accordance with Specialized Credit financial business 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 of more than 8%.
    • - 24 - 28. FINANCIAL ASSETS AND FINANCIAL LIABILITIES: (1) Fair value of financial assets and liabilities The fair value of financial assets and financial liabilities as of September 30, 2013, and December 31, 2012, is summarized as follows (Unit: Won in millions): September 30, 2013 Book value Fair value Assets Financial assets Cash and bank deposit Investment financial assets Card assets Other assets Total Liabilities Financial liabilities Borrowings Bonds payable Other liabilities Total December 31, 2012 Book value Fair value 948,918 948,918 824,576 824,576 1,767 9,229,678 171,393 10,351,756 1,767 9,698,817 173,879 10,823,381 1,767 9,707,038 182,292 10,715,673 1,767 10,119,434 182,697 11,128,474 285,000 6,403,903 1,395,071 8,083,974 285,516 6,578,251 1,395,061 8,258,828 487,500 6,533,176 1,517,677 8,538,353 488,832 6,740,956 1,517,676 8,747,464 The Company’s valuation techniques and relevant policies with regard to the fair value are the same as those used for previous year. (2) Netting on financial assets and financial liabilities Derivative assets and derivative liabilities recognized by the Company can be set off in accordance with the future events described in derivative master netting agreements. The effects of netting agreements as of September 30, 2013, and December 31, 2012, are as follows (Unit: Won in millions): September 30, 2013 Related amounts not set off in the consolidated statement of financial position Gross amounts of recognized financial assets/ liabilities Financial assets Derivatives assets Financial liabilities Derivatives liabilities Gross amounts of recognized financial liabilities/ assets set off in the consolidated statement of financial position Net amounts of financial assets/ liabilities presented in the consolidated statement of financial position Financial instruments Cash collateral pledged Net amount 2,513 - 2,513 1,190 - 1,323 42,841 - 42,841 1,190 - 41,651
    • - 25 - December 31, 2012 Related amounts not set off in the consolidated statement of financial position Gross amounts of recognized financial assets/ liabilities Financial assets Derivatives assets Financial liabilities Derivatives liabilities Gross amounts of recognized financial liabilities/ assets set off in the consolidated statement of financial position Net amounts of financial assets/ liabilities presented in the consolidated statement of financial position Financial instruments Cash collateral pledged Net amount 901 - 901 219 - 682 53,555 - 53,555 219 - 53,336 (3) 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 previous year. The table below provides the Company’s financial assets and financial liabilities recorded at fair value in the condensed consolidated statements of financial position as of September 30, 2013, and December 31, 2012 (Unit: Won in millions): September 30, 2013 Book value Financial assets Derivatives assets Financial liabilities Derivatives liabilities Fair value Level 1 Level 2 Level 3 2,513 2,513 - 2,513 - 42,841 42,841 - 42,841 - December 31, 2012 Book value Financial assets Derivatives assets Financial liabilities Derivatives liabilities Fair value Level 1 Level 2 Level 3 901 901 - 901 - 53,555 53,555 - 53,555 - The table below provides the Company’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 of September 30, 2013, and December 31, 2012 (Unit: Won in millions): As of September 30, 2013 Investment financial assets Financial assets AFS (*) 1,767 As of December 31, 2012 1,767 (*) Financial assets AFS are unlisted equity securities and recorded at cost since they do not have quoted prices in an active market and the fair values are not measured with reliability. (4) The Company recognizes the transfers on the date of the event of change in circumstances that caused the transfers.
    • - 26 - (5) 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 Company classifies a currency swap and an interest rate swap as Level 2 in fair value hierarchy. (6) There are no significant changes in business environment or economic environment that affect fair values of financial assets and financial liabilities held by the Company as of September 30, 2013. (7) Book value of financial assets and financial liabilities The table below provides book value by category of financial assets and financial liabilities recorded at fair value in the consolidated statements of financial position as of September 30, 2013, and December 31, 2012 (Unit: Won in millions): September 30, 2013 Financial assets at fair value through profit or loss (“FVTPL”) Designated at FVTPL Trading Financial assets Cash and bank deposit Investment financial assets Card assets Other assets Total Loans and receivables - - 948,918 - - 9,229,678 168,880 10,347,476 Financial assets AFS Hedging derivatives - Total - 1,767 1,767 2,513 2,513 948,918 1,767 9,229,678 171,393 10,351,756 September 30, 2013 Financial liabilities at FVTPL Designated at Trading FVTPL Financial liabilities Borrowings Bonds payable Other liabilities Total - - Amortized cost 285,000 6,403,903 1,352,230 8,041,133 Hedging derivatives 42,841 42,841 Total 285,000 6,403,903 1,395,071 8,083,974
    • - 27 - December 31, 2012 Financial assets at FVTPL Designated at FVTPL Trading Financial assets Cash and bank deposit Investment financial assets Card assets Other assets Total Financial assets AFS Loans and receivables - - 824,576 - - 9,707,038 181,391 10,713,005 Hedging derivatives - Total - 1,767 1,767 824,576 901 901 1,767 9,707,038 182,292 10,715,673 December 31, 2012 Financial liabilities at FVTPL Designated at Trading FVTPL Financial liabilities Borrowings Bonds payable Other liabilities Total - Amortized cost - Hedging derivatives 487,500 6,533,176 1,464,122 8,484,798 Total 53,555 53,555 487,500 6,533,176 1,517,677 8,538,353 (8) Net profit or loss of financial instruments by categories Net profit or loss of financial instruments by categories for the nine months ended September 30, 2013 and 2012, is as follows (Unit: Won in million): September 30, 2013 Interest income Financial assets Loans and receivables Financial assets AFS Hedging derivatives Financial liabilities Financial liabilities at amortized cost Hedging derivatives Total Interest expense Card revenue 15,214 - - - - - - - - - - 233,872 - 15,214 233,872 1,823,717 Card expenses 1,823,717 767,313 (Reversal of) Impairment loss - Valuation gain (loss) Disposal gain (loss) Foreign currency translation gain (loss) - - - - - - - - - - - - - - - (3,600) 767,313 - 807 807 (3,562) 81 81 3,600 3,600 38 Foreign exchange gain (loss) 6,235 6,235
    • - 28 - September 30, 2012 Interest income Financial assets Loans and receivables Financial assets AFS Hedging derivatives Financial liabilities Financial liabilities at amortized cost Hedging derivatives Total Interest expense Card revenue Card expenses 16,085 - 1,779,520 - - - - - - - - - 259,203 - - 16,085 259,203 (Reversal of) Impairment loss 1,779,520 776,087 - Valuation gain (loss) Disposal gain (loss) Foreign currency translation gain (loss) - - 28,681 - - - - - (799) - - - - 134 776,087 Foreign exchange gain (loss) 134 (16,921) (16,921) (799) 5,712 799 (11,768) - 16,913 6,511 29. NET INTEREST INCOME (EXPENSES): Net interest expenses for the three months and nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): 2012 2013 Three months ended September 30. Interest income Cash and bank deposit Others Total Interest expenses Borrowings Bonds payable Others Total Net interest expenses Nine months ended September 30. Three months ended September 30. Nine months ended September 30. 4,381 311 4,692 13,873 1,341 15,214 5,203 835 6,038 14,085 2,000 16,085 4,186 72,673 25 76,884 14,561 219,188 123 233,872 6,117 79,793 52 85,962 19,637 239,404 162 259,203 (72,192) (218,658) (79,924) (243,118)
    • - 29 - 30. NET COMMISSION INCOME: Net commission income for the three months and nine months ended September 30, 2013 and 2012, is as follows (Unit: Won in millions): 2012 2013 Three months ended September 30. Commission income Card assets Total Commission expense Service fee Financial payment fee A new credit sale handling fee Merchants co-payment fee Overseas payment fee Other Total Net commission income Nine months ended September 30. Three months ended September 30. Nine months ended September 30. 378,125 378,125 1,136,196 1,136,196 377,839 377,839 1,125,264 1,125,264 133,699 2,900 33,682 423,140 8,824 120,151 135,713 3,292 32,610 408,828 9,831 93,790 15 9,773 12,833 192,902 185,223 45 35,679 37,584 625,423 510,773 21 11,896 9,104 192,636 185,203 65 30,290 24,837 567,641 557,623 31. OTHER OPERATING REVENUE AND OTHER OPERATING EXPENSES: Other operating income and other operating expenses for the three months and nine months ended September 30, 2013 and 2012, are as follows (Unit: Won in millions): 2012 2013 Three months ended September 30. Other operating revenue Foreign exchange gain Foreign currency translation gain Gain on derivative transactions Gain on valuation of derivatives Others Total Nine months ended September 30. 3,079 9,095 - 807 (60,459) 5,048 (51,525) Nine months ended September 30. 3,600 23,046 36,548 2,364 7,804 16,916 807 Three months ended September 30. 16,929 - - (11,768) 14,794 22,306 38,369 63,102 2012 2013 Three months ended September 30. Other operating expenses Foreign exchange loss Foreign currency translation loss Loss on derivative transactions Loss on valuation of derivatives Others Total Nine months ended September 30. Three months ended September 30. Nine months ended September 30. 1,332 2,860 387 1,293 (60,459) 3,562 10,219 (48,908) 51,979 58,401 (11,757) 16 - 799 16,921 6,910 12,461 16,921 23,100 42,129