[Interpreted] Greetings. I am Peter Kwon, IR Manager of KBFG. We will now begin 2017 Q1 Business Results Presentation of KBFG. We expressed our deepest gratitude to all participants. We have here with us our Group CFO, Huh Jungsoo, as well as Group executives. First, our CFO, Huh Jungsoo, will give a presentation on 2017 Q1 business results and then we will have a Q&A session. Now I will invite our CFO to deliver presentation on Q1 earnings release.

Good afternoon. I am Huh Jung, CFO of KB Financial Group. Before going into Q1 2017 earnings results, let me present on the overall business highlights. In Q1, despite a bit of a slowdown in loan growth, led by household loans, driven by aggressive NIM improvements and core marketing with newly launched KB Securities, core income displayed sound growth. Thanks to a series of ERP and corporate-wide cost controls, G&A was kept at a sound level with overall asset quality and credit cost within the expected stable range. Also last Friday, as you know, the BOD resolved to conduct tender offerings and share swap for acquisition of outstanding shares in KB Insurance and KB Capital. Once this process is complete under an accountable management of the majority shareholder, both companies’ business activities will become more efficient, which we expect will lead to better group level profitability and synergies across subsidiaries. With that, let me move on to Q1 2017 earnings results. Please refer to Page 2. KB Financial Group’s Q1 2017 net profit was KRW 870.1 billion. This is 59.7% higher year-over-year driven by growth in net interest income on the back of NIM improvement in growth and fees and commissions income from the consolidation effect of Hyundai Securities. On a quarter-over-quarter basis, the increase was 91.7%. There was significant improvement in non-interest income, driven by fees and commissions and other operating income. G&A also normalized, and in Q1, there was one-off factor from BCC sales, all leading to higher performance than market expectation. Looking at the line item, Q1 net interest income was KRW 1,726.4 billion, underpinned by asset growth and better margins, the growth was 14.6% year-over-year. On a Q-on-Q basis, despite NIM growth, net interest income fell 1.4%. The reason for the decline is higher interest expense…

Thank you very much CFO. We will now engage in a Q&A session. For those who are joining via Internet, please refer to the contact information on the last page of the presentation, and for those who are listening by phone, please press star and one and ask your question. Now we will wait for the questions. For your information, we have a 30 second lag between the webcasting and the queue, so please bear with us. First question from HMC, Mr. Kim Jinsang.

Thank you very much for the good performance this quarter. I would like to ask four questions. NIM improved 3 basis points last quarter, so we were expecting a more slower movement on NIM expansion, but despite that we've seen a higher improvement, so I would like to understand if there were any particular reasons, or do you expect to see the current trend continue going forward? And also I would like to understand what your annual group-based NIM is? And also secondly, we see that the NIM has improved but the loan growth has been stagnant, and at the Group level, the interest income had actually declined. You talked about some of the one-off factors and the calendar effect as well, i.e., we think that those were the two drivers. But the fact that the loan growth was stagnant is because the government has announced the household debt management master plan, so I was wondering whether that impact is being coming through, or do you expect in the second quarter you'll be able to see normalization of loan growth? Third has to do with your asset quality and your soundness. KB has been quite conservative in its provisioning policies. I would think that if you look at your credit cost, there has been some increases, especially for credit card that credit cost trend has been on an upward trend. Is this a signal that tells us that the marginal borrowers are now being faced with some difficulties, could you elaborate? And also fourth question is that, if you are in the move to make KB Insurance and KB Capital to make them as wholly-owned subsidiaries, I find that to be a very desirable direction in terms of the speed as well. Compared to the shareholding in the past, you would now have 100% stake, so can you elaborate and provide some color as to what potential additional synergies that we may expect? Would there be new initiatives that you are currently envisioning and if you could quantify that impact, that would be helpful. I apologize for asking too many questions.

Thank you very much for the questions. Just give us a moment to prepare for the answer. Hold for a minute.

Thank you, Mr. Kim for the questions. You’ve asked four questions. One question has to do with the NIM trend. What would be the year-end NIM be for us? Second question had to do with loan growth. It was quite stagnant in Q1. You were asking what our projection would be for the year-end. You talked about the increase in credit cost as well, so I will respond to that question as well, and also potential synergies with KB Insurance and KB Capital. Relating your question on NIM, from end of last year after the U.S. election, the market rate has gone up quite a bit. If you look at historically from 2011, the market rate has fallen and hence NIM had also declined. Then came last year from Q1, Q2 and Q3, we've seen NIM growth and NIM expansion. And so for this year, 5 basis point and 6 basis points for banking group, we've seen some increases. With the market rate increase in Q1, we've seen a lot of growth in the demand deposits, the low cost deposits and we were able to reduce on the funding cost and that had an impact. And also in the first quarter on the household loans and on the SOHO, we've focused on pricing and that also led to NIM expansion, especially we further segmented on the grades of the customers. So we are very much focused on segmenting the pricing aspect, so that really is coming through to the profitability side. And in terms of the card loan, last year from the second half of the year, we've been really trying to expand on the card loan receivables and thanks to that that also contributed to a NIM expansion. By the end of the year in light of the U.S.…

Thank you very much for your answer. Now the next question is coming from Mr. Hung Chung Yang [ph] from Macquarie Securities.

Hello. I’m Hung Chung Yang [ph] from Macquarie securities. Congratulations on your earnings. I have three basic questions. First question is related to provisioning. For DSME, you mentioned the one-off provisioning, and apart from that I think that for your fee income and from your other operating income, it also has improved markedly, so can you tell us in more detail, why? Second is our SG&A. And after consolidating with Hyundai Securities in Q4 of last year, you mentioned that your cost can go up, however it seems lower than expected. So maybe it's because of your cost cost-cutting efforts and then there was a net-off effect with the increase in costs for [indiscernible] or is it because the effects coming from ERP of last year and the previous ERPs, you have had that cost-cutting effect. Can you tell the breakdown? Last question is about the deal between KB Insurance and KB Capital. So related to this question, you mentioned that the previous IR that you would think about it after capital requirement guideline has been established but it seems that you have finalized your decision, so can you tell us your stance on that?

Yes, thank you for those questions. We will prepare for the answers and then get back to you soon.

Thank you for your questions Mr. Hung Chung Yang [ph]. I think you asked about three questions and you mentioned that other operating income, the reason why it has gone up. Second question was about SG&A management, and the third was the capital issue related to KB Insurance and KB Capital related to other operating income, Q-o-Q we have increased KRW 485 billion and looking into it. In Q1, we had good ELS sales because in the previous quarter it was about KRW 250 billion that was sold, and in this quarter, we have had about KRW 600 billion that was marketed, so trust income gained substantially. Also in the previous quarter, there was the integration costs of about KRW 95 billion that existed for the derivative valuation model of securities and with the effects of currency rate going down, we have had the securities and derivatives related gains that also grew substantially, and for our short-term bonds we had a lot of increase. So that is why we also had interest rates going down, which led to the gains of the bond valuation and we had dividends that also grew from that, so that is why it all added to the increase in other operating income, so it is reason - well, the reason behind that is the FX, currency exchange rate drop and the derivative and securities related gains that have gone up substantially for this quarter. And for the SG&A, for Hyundai Securities, they actually spend about KRW 600 billion in costs and then we were looking at KRW 150 billion per quarter. And before Hyundai Securities consolidation for SG&A, it was about KRW 4 trillion, so per quarter it's about KRW 1 trillion to KRW 1.1 trillion each quarter in won basis, and in this quarter…

We would take the next question from Dongbu Securities, Mr. Byung Gun Lee. Go ahead.

Yes, I am Lee Byung Gun from Dongbu Securities. I would like to first also thank you for good performance. I have two questions. First question has to do with BCC. You mentioned that there was a one-off factor of BCC. Can you share with us the numbers for that? And also compared to what we were expecting, I feel that your basic fundamentals are much more sounder. So in line of the breakdown between the recurring aspects and non-recurring aspects, what is your assessment on the profit on a recurring basis? And second question is on your KB Insurance. We, of course also view very positively about the potential synergistic effect, but if you look at IFRS 9 application starting next year on the P&C insurance side, if you look at stand-alone and consolidated, the impact is going to be different. So at the holding company level and if you are consolidated, I would like to understand in terms of the risk management, there is going to be new variables and parameters that you have to consider. If IFRS 9 is consolidated, then there would be early application, then when it comes to asset management of the KB Insurance, you basically would have to - there is a possibility there would be new type of intervention that would be required at the holding companies level. What is your view on this?

Yes, we will respond to that question in a moment.

Yes, Mr. Lee, thank you for those questions. Relating to BCC in terms of the size, please understand that we won't be able to disclose the specific number. It is somewhere around KRW 150 billion to KRW 200 billion, and once again this is on a non-recurring basis. It's a one-off factor. In terms of our basic fundamentals, we also feel that a lot has improved. In terms of our pricing capabilities and various other capacities, I think overall our organization has become much more sounder. Based on KRW 870 billion, if you were to take off all the one-off, I would think that mid KRW 600 billion would be on the so-called the once that actually exclude the one-offs. We believe that going forward in terms of our business fundamentals, we are very confident that we would be able to continue to further strengthen our might and with making Insurance and Capital our wholly-owned subsidiaries with companies whose ROE is 13% and 14%, we think that our capabilities will be upgraded. With regards to KB Insurance, I think our executive from the insurance arm will respond to that.

Yes, I am from KB Insurance. My name is Woo-Jin Kim. Would like to respond to Mr. Lee’s question. With the inclusion as a subsidiary and potential synergies with KB Insurance, our CFO has amply responded to that question. So moving onto our IFRS 9, and potential variables and factors that we need to consider for risk management. In terms of asset management, as we become included into KB, overall asset management strategies and asset allocation, everything will be based on mid to long-term plan, focusing on soundness and safety and this will be linked with the overall risk of the group and all our work is being done based on that premise. So we've conducted our prior checks and we believe that things would go as planned without much difficulties. So before becoming part of the group compared to the competitors, in terms of the duration of the asset and liabilities, we want to extend them and rather than focusing on the investment yield, we want to have a safer asset, so that was the efforts that we have exerted to-date. Thank you.

Thank you for the good answer. We have no other questions in the queue, so please hold. Next question from Daishin Securities, Mr. Choi Chung-uk.

Yes, I’m Choi Chung-uk from Daishin Securities. Well, I think this question wasn't asked. For the - I know that you have had KRW 150 billion or so corporate tax impact that went down. So can you give us the breakdown and the background?

So let us get back to you after we prepare an answer, so please hold. Well, actually I think we need to look into this further, so IR Department will contact you personally after this IR presentation. Thank you. From NH Securities Mr. Wong-Joo [ph].

Yes, I am Wong-Joo [ph] from NH Securities. First of all, I would also like to thank you for good performance. I have two questions. First, you talked about corporate loans and you're expecting about 5% to 6% growth going forward. Now if you were to break it down between large corporation and SMEs, can you share with us what the respective growth rate would be? And secondly for KB securities, the results are quite good and especially with regards to derivatives related gains, you mentioned that there was a significant increase. I would think that this is intrinsically a one-off factor, so then I'm concerned that maybe going forward this aspect of this income is going to decline. On fees and commissions income that also went up, and on the trust, I would think that there were trust-related income increase as well. Index itself has actual risen. So in Q1, there was a lot of prepayment and ELT sales was much more promoted, so I would think that bancassurance and others would have also sold well at the same time but under the current backdrop with prepayment and the fund all selling well, I think cannot really sustain. So can you share with us your view?

Thank you for the questions. Please give us a moment.

Thank you Mr. Wong [ph] for your questions. For the corporate loans, I've mentioned that 5% to 6% growth previously and what we want to focus on mostly is on the SOHO loans. As I mentioned at the very beginning of the presentation on the household, unsecured and SOHO loans because the gains we get is more attractive and we expect the market would be positive for us for these segments, so that's where we are targeting. So it's a growth that we think is going to be mostly driven by SOHO loans. In terms of securities, the derivative-related gains in Q1 was quite sizable and going forward with interest rates hikes, can we continue to expect this level of income? That is a valid point. And if we would get KB securities, as we recapitalize to KRW 4 trillion on ROE basis, we think that we will be able to achieve more than 6%. So on a per annum basis, 6% to 7% ROE is what we are expecting. In terms of fees and commissions income, in Q1, basically there were a lot of pre-redemptions. And so on the trust side, we've seen increases on the fees and commissions income. Going forward, I agree that it may not be as current level but if you look at ELS trust product, if you look at the product, we were the first to launch it into the market in the banking industry and also there were some customers who bought certain amount of loss, and so right now we have organized the products in such a way that it's more safer, meaning the return level is a little lower but we've lowered the barrier or actually eliminated the barrier, so that it is a more stable and safe for our client base. So we've seen quite a bit of sales of these types of products. So in line with the market trend rather than a certain product sells well or not, I can say that our product portfolio is quite diverse, so under the current - if there is a customer that does not satisfy the interest rates in hurdles [ph], then basically this is a trust product where 3% to 4% return is possible. So this is regardless of how the marketplace plays out, we think these types of trust vehicles will sell well. And the extent of the gain can decline slightly but not to a larger extent is what we think. Thank you.

Thank you very much for the answer. We don't have any other questions coming in, so I think we have had a fruitful Q&A session. However we will hold a little bit more. Since there are no other questions in the queue, we will conclude our Q&A session. With this we will conclude 2017 Q1 KBFG earnings performance release. Thank you.