Good afternoon. My name is Kyu Sul Choi, the head of IR at KB Financial Group. Thank you for taking part in today's earnings conference of KB Financial Group for Q3 2013. The access to this conference is being provided via Internet and conference call, being webcast real time for Korea and abroad. During the Q&A, you may call in to ask questions. Joining us in today's earnings call, we have with us KBFG's CFO, Woong-Won Yoon, as well as executives from KBFG subsidiaries. The conference will consist of the earnings presentation by our CFO, Won Yoon, on the earnings results for Q3 2013, followed by a Q&A session, at which time you may call in for questions, so please utilize the Q&A session for questions. Let me now present our CFO, Woong-Won Yoon, for the earnings presentation for Q3 2013.

Good afternoon. My name is Woong-Won Yoon, the CFO of KB Financial Group. Let me begin the earnings presentation of KBFG for the third quarter 2013. First, the financial highlights. KBFG's cumulative profit for Q3 2013 marked KRW 1,037.9 billion, edging down around 36% year-on-year. The narrowing interest income from the NIM contraction, along with the one-off factors such as the equity method valuation loss on BCC recognized in Q2, led to such results. Profit for Q3 was boosted by the absence of the negative one-offs seen in Q2, such as the BCC equity method loss and impairment loss on securities, while some one-off gains like the sales gain on marketable securities further supported the bottom line. The quarterly profit jumped 183% quarter-on-quarter to KRW 462.9 billion. The group's gross operating income for Q3 posted KRW 1,996.5 billion. The gross operating income for the recent quarters hovered below KRW 2 trillion due to the one-off losses on the noninterest income side, including the various stock market-driven impairment losses on securities held. However, Q3 was not only free from such negative one-offs, but also was bolstered by one-off gains through the sales gain on securities. As a result, the gross operating income recovered back to the KRW 2 trillion range. Including trust and AUM, the group's total asset marked around KRW 383 trillion as of the end of September. Next page, please. The cumulative provision for credit losses, PCL, for the group came in at KRW 1,084.2 billion, down by around 4% year-on-year. Owing to the proactive resolution measures on NPL, as well as our efforts to enhance asset quality, our quarterly trend of provisioning remains quite stable. As for Q3, however, our preemptive measures for the year-end NPL ratio management led to the PCL of KRW 406.6 billion, up 15.7%…

Thank you. That was an earnings presentation by our CFO. We will now begin the Q&A session.

[Operator Instructions] We will take the first question from HI Investment & Securities. Sang-Ho Yoo - HI Investment & Securities Co., Ltd., Research Division: My name is Sang-Ho Yoo from HI Securities. I have a couple of questions about your margin. I believe that your NIM contraction size was a little bit larger than anticipated. Now, of course, the interest side of the reduction, I thought it was because of the growth limitation in the market, but when it comes to interest expense, it seems, on a quarter-on-quarter basis, it has -- it's increased. So between the previous quarter and this quarter, if you look at the deposit rate trend, yes, the policy rate has gone up a little bit, and if you look at the BOK announced table, the trend is actually lower than the rate movement. So I was wondering, why the NIM contraction? Is it because you spent more money in order to attract more deposit? Or are you continuing to experience limitation as to NIS contraction? So if this trend is going to continue, when do you think it will bottom? And how do you plan to actually deal with this situation?

Yes, our CFO didn't get to hear the last part of your question. Could you repeat that? Sang-Ho Yoo - HI Investment & Securities Co., Ltd., Research Division: Yes, if I may recap, your interest expense increased quarter-on-quarter, so what are the reasons? And by when do you think that your NIM contraction will hit bottom and start to rebound? So if your NIM trend is going to recover to achieve that, what areas should you work on so that you could further improve the NIM trend going forward?

Regarding the expansion of the interest expense, I believe that it had nothing to do with the funding cost per se. But we had the principal protection trust-related accounting treatment, which was a temporary one-off factor. The more important thing, I believe the gist of your question was, when is the bottom going to come when it comes to NIM contraction, I believe. We are continuing to work on asset portfolio improvement, and we are trying to attract some sound company clients as corporate clients, during which time we were reducing some interest rate. And also, such factors, sales at first led to some contraction in terms of NIM for the margin. But nevertheless, we are making various efforts to further expand the NIM going forward. Now first of all, we need to lay the foundation of solidifying our client relationships, not only through the price competitiveness. We believe that we have to further enhance our service capabilities, and we are trying to use that as appeals to our customers. And in order to conduct appropriate pricing, we are further upgrading and refining our credit scoring model. So through these efforts, we believe that the NIM trend by the fourth quarter will be bottoming out -- or the third quarter, I believe, would be the bottom. So after that, I believe through these efforts, we will gradually see the improvement of the margin.

Yes, if I may, I would like to elaborate just a little bit more. As was mentioned by our CFO, during the second quarter, I believe I talked about it before, about KRW 42 billion worth of the noninterest income category incurred losses, and that had to do with a principal protection trust. And that has led to some one-off losses. So the second quarter interest expense, you should look at it actually -- should be considered with extra KRW 42 billion. So if you look at it in that perspective, actually -- we are actually seeing a smooth trend quarter-on-quarter, so if you add that one-off factor that existed last quarter.

Yes, once again, there is the lagging effect, and right now, we do not have any people who have requested for questions. [Operator Instructions] I think there's a question coming in, so please do bear with us for a moment. Yes, we will take the next question, Hong-Chul Shin from KB Investment & Securities. Hong-Chul Shin - KB Investment & Securities Co., Ltd.: I believe that in order for us to calculate the profit level in terms of the gains on the sales of HMM, and also with the impact from FX decline and the write-back, as well as the write-off side of the collective mortgage loan, could you be a little more specific and share with us the specific figures?

In Q3, there were a couple of one-off factors, and I did include that in my presentation, and I will share with you more specific numbers. In terms of the HMM, as well as other securities and the sales of those securities, the figure in total is about KRW 60 billion in terms of gains from sales. And we have about 4.67 million shares, and we have sold entirety at per share of KRW 24,000, and it's about KRW 46.5 billion. And so there were also other sales of the securities that we had hold. And in terms of the CVA reversal and the write-back, in Q3, because FX rate actually declined, SPP and Hanjin shipbuildings in terms of our FX forward position, there was a CVA impact of about KRW 61 billion. Another factor is that in order for us to comply with the NPL guideline by the end of the year, we had in terms -- we had written off some of the collective mortgage loans, and additional provisioning that arose from that was KRW 60 billion. I hope that answered your question. We will move on to the next question.

From SEC Securities [ph], Mr. Jin-Hong Kim [ph].

During the third quarter, your NIM contraction was quite noticeable. And as you recall, that happened during the second quarter as well. So compared to our expectation, the speed of NIM contraction seems to be faster. So I was wondering whether you are looking -- it seems like you are looking at the NIM trend going forward into the fourth quarter to be flat or slightly down. So what are the reasons? I think that you should always focus on NIM. I believe that the market competition has always existed, and I think that all throughout this year, you were very much focused on asset quality in terms of your loan extensions. So if you think that margin contraction could further proceed during the fourth quarter, what would be the reasons? You talked about the KRW 42 billion worth of losses, which was considered one-off from the principal protection trust item. Then if that does not take place during this fourth quarter, I don't think that your NIM should contract too much. So -- I mean, I understand the one-off factors for Q3, so could you talk about the fourth quarter?

During the third quarter, the margin reduction took place by about 10 basis points. I briefly touched upon it in my presentation earlier, but let me elaborate. Up to Q2, we were not really growing our assets, so we were trying to grow our assets during the third quarter. And at the same time, in order to attract more high-quality clients such as high-quality SOHOs or high-quality SMEs, we worked on the marketing side. So through such efforts, we did give them a lower interest rate on their loans. And also, on the retail side of the business, home equity and unsecured loans, we did provide some interest rate reduction for our clients -- retail clients as well, which also led to some further compression of the NIM. So into the third quarter, the interest rate policies have been adjusted further, and in the future, we will make extra efforts to expand our margin. Looking ahead into the fourth quarter, we are anticipating either a flat or slightly downward trend in terms of the NIM. Now the pricing policies that were implemented in the third quarter will be normalized to a certain degree by the fourth quarter, and that will be the reasons. And also, in order to secure further margin, we are looking at ways to bring in more gains. Now one of those examples would be the following. Now the share of the 1-year time deposit duration portion, we want to adjust the portion. And also, a large amount and low interest rate time deposit, we want to actually control and adjust those shares so that we could better optimize our funding cost side. So overall, I think that during the fourth quarter, we believe that the NIM will be either flat or slightly edge down. As for the KRW 42 billion one-off that I talked about when it comes to principal protection trust, I was talking about that portion and that referred to the second quarter, and I was talking about the accounting one-off. So it's something that is not including in the net interest margin NIM. So that's my elaboration.

[Operator Instructions] Yes, we will take the next question from Morgan Stanley, Mr. Seok Joon.

Yes, I have 2 questions. First has to do with your fee and commissions. On the banking side, especially for bancassurance, we've seen significant decline, and I understand your explanation. But from 2014, in terms of this trend of decline, do you think that this is going to continue? And do you see -- or do you have any measures to increase your fee and commission income going forward? Second question has to do with your G&A. I think you're doing a good control of this expense. But for cost-to-income ratio for 2014, what do you project the cost-to-income ratio to be? On the credit card side, do you think that you can pull down the expense a little further? Or is there a need for more marketing activities, or should we expect increase in expenses? And I understand some of your bank branches are closing down, so I would like to understand what you project for CI ratio?

In terms of fees and commissions for this quarter and this year, there's been a significant decrease, and I explained to you the reason why. Especially we've seen some significant decline in bancassurance for beneficiary certificate, and for trust products, fee and commission income was low. And in order for us to improve this business, we are putting in a lot of efforts. But in particular for bancassurance, what we're doing is improving our product portfolio. And for beneficiary certificates, we are looking at increasing our competitiveness in wealth management business, so those are aspects where we are really focusing on. And our KB Asset Management and KB Securities, our subsidiaries, we are trying to further solidify our collaboration with these other companies to enhance our competitiveness. Relating to your second question about G&A. In terms of cost control, we've been very much focused on bringing the cost down. On the costs relating to the operational aspect, we will continue to make the investment. From a structural perspective, there are some costs that are fixed, for instance, personnel-related costs, IT costs and costs related to maintaining sales branches. So these are some fixed costs, setting aside the salary aspect, but if you look at the IT costs and the branch network-related costs, we will make sure that we don't make any redundant investments, and we will improve on the process efficiencies. And especially for IT investments, we will improve our efficiency in managing the IT expense, and we will make our sales branches more light and we will relocate, reallocate our branch-related resources to really enhance efficiency. So in terms of the G&A cost increase, we are putting in efforts to make sure that we can stably control and maintain the level of expense.

Next question, Mr. Seo Soo from Kiwoom Securities.

I have questions. Now margin and growth seem to be the offsetting factors, especially from KBFG. I think that when it comes to the home equity loans, if you grow that side of the asset on the retail side very aggressively, then that could actually erode your margin. So if it's the other way, your growth might suffer. So if that is the case, either in Q4 and next year, where would you actually focus on? In other words, recently, the home equity loans and mortgage loans, you expanded those types of loans quite a bit. And are you going to persist that policy? And do you plan to continue boosting the SME loans? Or do you have any strategic plans otherwise? And secondly, the government is pressuring the loan interest rate drop on the card loans. So how is that under -- proceeding, and how will that impact your bottom line?

Yes, thank you for your 2 questions. First of all, I believe that our growth target is to grow in line with the GDP growth rate. If I may actually break it down to different business lines, we are looking at the corporate customer portfolio. And to enhance the portfolio, we are continuing to identify low-risk SMEs or SOHOs, and such strategy will persist going forward as well. Now on the retail side, as you have pointed out, we have been focusing on increasing the home equity loans. And if we continue to do that, it could further compress our NIM. Now when it comes to general loans extended to retail customers, in other words, those unsecured loans, we have certain high-quality target groups who are professionals with high salaries, et cetera. We are targeting those high-quality customer segments so that we could further cross-sell, and we are planning to continue strengthening marketing efforts on those high-quality retail customers as well so that we could also increase high-quality, low-risk retail unsecured loans. So such efforts, I think, will continue as the basic direction in the future as well. And secondly, you asked about the card loan-related pressure on the interest rate. To answer that question, regarding the interest rate structure improvement, the government is running a task force team to study this topic. So I believe that our financial group is also coming out with plans to further reduce rates, as well, according to the government policies. But we haven't decided to which degree we will lower it. But if you look at the current balance we have, when it comes to credit card loans and cash advance, we have outstanding balance around KRW 4 trillion. In other words, if we lower the rates by 10 basis points, it would be about KRW 4 billion per year. But I think that the actual number that is reduced will be much lower than that. So again, there has been no decision made to date as to what kind of interest rate adjustment will be made on our loans. And so I think that you could simply apply the reduction basis points to our outstanding balance to come up with the impact.

Mr. Seok Kyu Hwang from Kyobo Securities.

I'm Seok Kyu Hwang from Kyobo Securities. I would like to ask 2 questions. First has to do with your NPL ratio. In order to defend your NPL ratio, you've mentioned that on the collective loan side, you have conducted some write-off. But still I believe that NPL ratio was on par with your second quarter number. I think that in the Q4, I believe that you are faced with a situation where we would have to lower the NPL ratio. But if you need to continue to write off the collective loan, I think this will have impact on the provisioning side. So my question is, these NPLs that's been written-off, could they be written back at a future date? Is there the possibility? And at the end of the rate, what should be your NPL target? And lastly, I'm sure that you're in the process of coming up with your business plan in terms of growth and NIM objective for 2014. Could you shed some light and provide some color? Because for next year, in terms of GDP growth and inflation rate, we think that it's going to be higher than this year. So I think growth-wise, next year will be a little more favorable than this year. So what is your take on this?

First of all, let me address the question about the year-end NPL ratio. We believe that compared to last year, our target, we expect, will be a little higher than last year's figure. And the basis for me saying this is that, as I explained in the second quarter, the supervisory authorities, as you know, with the reclassification of the companies who've entered into voluntary program, there's reclassification and the impact is about 30 basis points, so that has to be catered into our NPL ratio. And our current NPL ratio is 1.92%, and we need to lower that to the target level. And if you do the calculation, we have about 27 basis points that we need to cut. Last year, in this fourth quarter, our NPL ratio, as you know, compared to the end of September, we were able to cut 39 basis points. So compared to what we did last year, it's only about 2/3 of what we had already done the previous year, so it's not overly or excessively burdensome. And as I said, in Q3, we've written off KRW 90 billion of collective loans. So if you consider all those factors, I believe that there is no difficulty in us attaining the NPL target ratio. And there will not be -- well, there will be very minimal additional provisioning that would arise from this process. So in Q4, in terms of asset quality, we can amply manage this, so within the scope and the plan that we have. Your question relating to the business plan for 2014, yes, it is currently underway, and we don't have any finalized figures to share with you at this point. But basically, in terms of growth, our basic stance is that, for the retail -- because this is a…

Next question, please? Mr. Ha [ph].

I'm from ETRADE Securities, my mane is Ha. Next year, I believe that you have a lot of the maturing high-interest rate loans, and how would that impact your NIM? Second question, I think that your G&A on a cumulative basis, on a year-on-year basis, it has come down, but would that mean that in the fourth quarter, it would actually come back to you as a burden? And another question, even if you consider the sales gain on marketable securities, I think that your noninterest side of the business results is quite sound. So any other one-off factors?

Excuse me, Mr. Ha, we didn't get to quite hear the second question. Could you repeat the second question, please?

Yes, I think -- I was talking about G&A. The cumulative G&A up to September has actually come down on a year-on-year basis. Now especially, the Q3 G&A has come down quite a bit. So it was a reduction on a cumulative basis and also on a quarterly basis. So the drop was quite sizable. So I was wondering whether the G&A expenses, some of that would actually carry forward to the fourth quarter.

Yes, I believe that you had 3 parts to your questions. First of all, next year, you were talking about the redemption of the high legacy rate debt. Now one thing that I could tell you is that, as we transferred to become a holding company, we had issued about KRW 4 trillion worth of subordinated debt, which is coming due. And secondly, when it comes to the economic crisis, we had issued some covered bond in the amount of about USD 1.2 billion. And again, that maturity is coming due next year as well. So on those 2 particular issuances, next year, we do expect some refinancing or rollover. And secondly, regarding the G&A, and you talked about the quarterly volatility, let me try to explain about that. Of course, we had some one-off factors. For instance, during Q2, we had some one-off situations, so in the third quarter, because of the high base effect, it seems like it has come down quite a bit. And rather than calling it deferring to the fourth quarter, but I think that it was because of the high base effect in Q2 that you saw a bigger drop in Q3. Now as for the fourth quarter, typically speaking, when companies come up with business plans on a quarterly basis, you could experience some deferral effect of some of the executions. So usually, the fourth quarter G&A tends to go up slightly because of the finishing off of the business plan for that particular year. So in that sense, we always have a likelihood of a slight increase of the G&A during the last quarter. But it won't be anything very sizable. I don't think that it will be anything remarkable, so it will be quite minimal. Thirdly, regarding the marketable securities, you were asking whether we had any other one-off factors. I already spoke about the major one-off factors already. Aside from what I had already mentioned, I think that the interest rate changes are affecting AFS or trading securities. So to a certain degree, we could experience some gains and losses. And during the third quarter, in that regard, additionally, we have generated some additional gains. So that was one of the factors that I could share with you.

In terms of the high-rated debt, the reason why we can't tell you about the exact impact on the margin improvement is because we don't know what type in the portfolio is going to be redeemed or -- so in terms -- that's why he was only able to share with you the absolute size of the high-rated debt. We don't have any more people waiting to ask questions, but we will wait for a couple of minutes.

Thank you. Since we have no further questions and because we had quite a few questions already, I believe that we could wrap up. So with that, we will now conclude the earnings conference of KB Financial Group for Q3 2013. The presentation and VOD of this conference will be available for access anytime on the IR webpage of KBFG. Also, if you have more questions, please contact our IR Department. We will do our best to address your questions. Thank you once again for your participation today. Thank you very much.