Obligation Korea Development Institute 1.75% ( US500630DB19 ) en USD

Société émettrice Korea Development Institute
Prix sur le marché 100 %  ▲ 
Pays  Coree du Sud
Code ISIN  US500630DB19 ( en USD )
Coupon 1.75% par an ( paiement semestriel )
Echéance 18/02/2025 - Obligation échue



Prospectus brochure de l'obligation Korea Development Bank US500630DB19 en USD 1.75%, échue


Montant Minimal 200 000 USD
Montant de l'émission 750 000 000 USD
Cusip 500630DB1
Description détaillée La Korea Development Bank (KDB) est une banque publique sud-coréenne qui soutient le développement économique du pays en fournissant des financements et des services aux entreprises, notamment dans les secteurs stratégiques.

L'Obligation émise par Korea Development Institute ( Coree du Sud ) , en USD, avec le code ISIN US500630DB19, paye un coupon de 1.75% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 18/02/2025







424(B)(2)
424B2 1 d875188d424b2.htm 424(B)(2)
Table of Contents
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-217914

PROSPECTUS SUPPLEMENT
(To Prospectus Dated June 19, 2019)

The Korea Development Bank
US$750,000,000 Floating Rate Notes due 2023
US$ 750,000,000 1.750% Notes due 2025
Our US$750,000,000 aggregate principal amount of floating rate notes due 2023 (the "Floating Rate Notes") will bear interest at a rate equal to Three-Month USD LIBOR (as defined
herein) plus 0.35% per annum. Interest on the Floating Rate Notes is payable quarterly in arrears on February 18, May 18, August 18 and November 18 of each year. The first interest payment on
the Floating Rate Notes will be made on May 18, 2020 in respect of the period from (and including) February 18, 2020 to (but excluding) May 18, 2020. The Floating Rate Notes will mature on
February 18, 2023.
Our US$750,000,000 aggregate principal amount of notes due 2025 (the "Fixed Rate Notes") will bear interest at a rate of 1.750% per annum. Interest on the Fixed Rate Notes is payable
semi-annually in arrears on February 18 and August 18 of each year, beginning on August 18, 2020. The Fixed Rate Notes will mature on February 18, 2025.
All references to the "Notes" are to the Floating Rate Notes and the Fixed Rate Notes, collectively.
The Notes will be issued in minimum denominations of US$200,000 principal amount and integral multiples of US$1,000 in excess thereof. The Notes will be represented by one or more
global notes registered in the name of a nominee of The Depository Trust Company, as depositary.
The payment of interest and the repayment of principal on the Notes will not be guaranteed by the Government (as defined herein).


Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.





Floating Rate Notes

Fixed Rate Notes



Per Note
Total

Per Note
Total

Public offering price

100.000%
US$750,000,000
99.691%
US$747,682,500
Underwriting discount


0.300%
US$
2,250,000

0.300%
US$
2,250,000
Proceeds to us (before deduction of expenses)

99.700%
US$747,750,000
99.391%
US$745,432,500
In addition to the initial public offering price, you will have to pay for accrued interest, if any, from and including February 18, 2020.
Approvals in-principle have been received from the Singapore Exchange Securities Trading Limited (the "SGX-ST") for the listing and quotation of the Notes on the SGX -ST. The SGX -
ST assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this prospectus supplement and the accompanying prospectus. Approvals
in-principle from, admission to the Official List of, and listing and quotation of the Notes on, the SGX -ST are not to be taken as an indication of the merits of us or the Notes. Currently, there is
no public market for the Notes.
We expect to make delivery of the Notes to investors through the book-entry facilities of The Depository Trust Company on or about February 18, 2020.


Joint Bookrunners and Lead Managers

BNP PARIBAS





Citigroup




Goldman Sachs


International





J.P. Morgan





KDB Asia










UBS


Prospectus Supplement Dated February 10, 2020
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424(B)(2)
Table of Contents
You should rely only on the information contained in or incorporated by reference in this prospectus supplement and the accompanying prospectus.
We have not authorized anyone to provide you with different information. We are not making an offer to sell these securities in any state or jurisdiction
where the offer or sale is not permitted.



TABLE OF CONTENTS

Prospectus Supplement



Page
Summary of the Offering

S-5
Use of Proceeds

S-7
Recent Developments

S-8
Description of the Notes
S-146
Clearance and Settlement
S-153
Taxation
S-156
Underwriting
S-157
Legal Matters
S-163
Official Statements and Documents
S-163
General Information
S-163

Prospectus



Page
Certain Defined Terms and Conventions


1
Use of Proceeds


2
The Korea Development Bank


3
Overview


3
Capitalization


6
Business


6
Selected Financial Statement Data


9
Operations

16
Sources of Funds

23
Debt

24
Overseas Operations

26
Property

26
Directors and Management; Employees

27
Tables and Supplementary Information

27
Financial Statements and the Auditors

33
The Republic of Korea

179
Land and History

179
Government and Politics

181
The Economy

184
Principal Sectors of the Economy

192
The Financial System

199
Monetary Policy

204
Balance of Payments and Foreign Trade

208
Government Finance

215
Debt

218
Tables and Supplementary Information

220

S-1
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Page
Description of the Securities

223
Description of Debt Securities

223
Description of Warrants

230
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424(B)(2)
Terms Applicable to Debt Securities and Warrants

230
Description of Guarantees to be Issued by Us

231
Description of Guarantees to be Issued by The Republic of Korea

232
Limitations on Issuance of Bearer Debt Securities and Bearer Warrants

233
Taxation

234
Korean Taxation

234
United States Tax Considerations

236
Plan of Distribution

244
Legal Matters

245
Authorized Representatives in the United States

245
Official Statements and Documents

245
Experts

245
Forward-Looking Statements

246
Further Information

248

S-2
Table of Contents
Certain Defined Terms

All references to "we" or "us" mean The Korea Development Bank. All references to "Korea" or the "Republic" contained in this prospectus
supplement mean The Republic of Korea. All references to the "Government" mean the government of Korea. Terms used but not defined in this
prospectus supplement shall have the same meanings given to them in the accompanying prospectus.

Our separate financial information as of December 31, 2018, June 30, 2019 and September 30, 2019 and for the six months ended June 30, 2018 and
2019 and the nine months ended September 30, 2018 and 2019 included in this prospectus supplement has been prepared in accordance with International
Financial Reporting Standards as adopted in Korea ("Korean IFRS" or "K-IFRS"). References in this prospectus supplement to "separate" financial
statements and information are to financial statements and information prepared on a non-consolidated basis. Unless specified otherwise, our financial and
other information included in this prospectus supplement is presented on a separate basis in accordance with Korean IFRS and does not include such
information with respect to our subsidiaries.

In this prospectus supplement and the accompanying prospectus, where information has been provided in units of thousands, millions or billions,
such amounts have been rounded up or down. Accordingly, actual numbers may differ from those contained herein due to rounding. Any discrepancy
between the stated total amount and the actual sum of the itemized amounts listed in a table is due to rounding.

Additional Information

The information in this prospectus supplement is in addition to the information contained in our prospectus dated June 19, 2019. The accompanying
prospectus contains information regarding us and Korea, as well as a description of some terms of the Notes. You can find further information regarding us,
Korea and the Notes in registration statement no. 333-217914, as amended, relating to our debt securities, with or without warrants, and guarantees, which
is on file with the U.S. Securities and Exchange Commission.

We are Responsible for the Accuracy of the Information in this Document

We are responsible for the accuracy of the information in this document and confirm that to the best of our knowledge we have included all facts that
should be included not to mislead potential investors. The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions
expressed or reports contained in this prospectus supplement and the accompanying prospectus. Approvals in-principle from, admission to the Official List
of, and listing and quotation of the Notes on, the SGX-ST are not to be taken as an indication of the merits of us or the Notes.

Not an Offer if Prohibited by Law

The distribution of this prospectus supplement and the accompanying prospectus, and the offer of the Notes, may be legally restricted in some
countries. If you wish to distribute this prospectus supplement or the accompanying prospectus, you should observe any restrictions. This prospectus
supplement and the accompanying prospectus should not be considered an offer and should not be used to make an offer, in any state or country which
prohibits the offering.

The Notes may not be offered or sold in Korea, directly or indirectly, or to any resident of Korea, except as permitted by Korean law. For more
information, see "Underwriting--Foreign Selling Restrictions."

S-3
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424(B)(2)
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any
retail investor in the European Economic Area ("EEA"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as
defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); or (ii) a customer within the meaning of Directive 2002/92/EC (as
amended, the "Insurance Mediation Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of
MiFID II.

Information Presented Accurate as of Date of Document

This prospectus supplement and the accompanying prospectus are the only documents on which you should rely for information about the offering.
We have authorized no one to provide you with different information. You should not assume that the information in this prospectus supplement or the
accompanying prospectus is accurate as of any date other than the date on the front of each document.

S-4
Table of Contents
SUMMARY OF THE OFFERING

This summary highlights selected information from this prospectus supplement and the accompanying prospectus and may not contain all of the
information that is important to you. To understand the terms of our Notes, you should carefully read this prospectus supplement and the
accompanying prospectus.

The Notes

We are offering US$750,000,000 aggregate principal amount of floating rate notes due February 18, 2023 (the "Floating Rate Notes") and
US$750,000,000 aggregate principal amount of 1.750% notes due February 18, 2025 (the "Fixed Rate Notes"). References to the "Notes" are to the
Floating Rate Notes and the Fixed Rate Notes, collectively.

The Notes will be issued in minimum denominations of US$200,000 principal amount and integral multiples of US$1,000 in excess thereof.
The Notes will be represented by one or more global securities registered in the name of a nominee of The Depository Trust Company ("DTC"), as
depositary.

The payment of interest and the repayment of principal on the Notes will not be guaranteed by the Government.

We do not have any right to redeem the Notes prior to maturity.

Floating Rate Notes

The Floating Rate Notes will bear interest at a rate equal to Three-Month USD LIBOR plus 0.35% per annum, payable quarterly in arrears on
February 18, May 18, August 18 and November 18 of each year. The first interest payment on the Floating Rate Notes will be made on May 18, 2020,
in respect of the period from (and including) February 18, 2020 to (but excluding) May 18, 2020. Interest on the Floating Rate Notes will accrue from
February 18, 2020, and will be computed on the basis of the actual number of days in the applicable Interest Period divided by 360.

Fixed Rate Notes

The Fixed Rate Notes will bear interest at a rate of 1.750% per annum, payable semi-annually in arrears on February 18 and August 18,
beginning on August 18, 2020. Interest on the Fixed Rate Notes will accrue from February 18, 2020 and will be computed based on a 360-day year
consisting of twelve 30-day months.

See "Description of the Notes--Payment of Principal and Interest."

Listing

Approvals in-principle have been received from the SGX-ST for the listing and quotation of the Notes on the SGX-ST. Settlement of the Notes
is not conditioned on obtaining the listing. For so long as the Notes are listed on the SGX-ST and the rules of the SGX-ST so require, the Notes, if
traded on the SGX-ST, will be traded in a minimum board lot size of S$200,000 (or its equivalent in foreign currencies). Accordingly, the Notes, if
traded on the SGX-ST, will be traded in a minimum board lot size of US$200,000.

Form and Settlement

We will issue each series of the Notes in the form of one or more fully registered global notes, registered in the name of a nominee of DTC, as
depositary. Except as described in the accompanying prospectus under

S-5
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424(B)(2)
"Description of the Securities--Description of Debt Securities--Global Securities," the global notes will not be exchangeable for Notes in definitive
registered form, and will not be issued in definitive registered form. Financial institutions, acting as direct and indirect participants in DTC, will
represent your beneficial interests in the global notes. These financial institutions will record the ownership and transfer of your beneficial interest
through book-entry accounts. You may hold your beneficial interests in the Notes through Euroclear Bank S.A./N.V. ("Euroclear") or Clearstream
Banking, société anonyme ("Clearstream") if you are a participant in such systems, or indirectly through organizations that are participants in such
systems. Any secondary market trading of book-entry interests in the Notes will take place through DTC participants, including Euroclear and
Clearstream. See "Clearance and Settlement--Transfers Within and Between DTC, Euroclear and Clearstream."

Further Issues

We may from time to time, without the consent of the holders of the Notes, create and issue additional debt securities with the same terms and
conditions as either series of the Notes in all respects so that such further issue shall be consolidated and form a single series with the relevant series of
the Notes. We will not issue any such additional debt securities unless such additional securities have no more than a de minimis amount of original
issue discount or such issuance would otherwise constitute a "qualified reopening" for U.S. federal income tax purposes.

Delivery of the Notes

We expect to make delivery of the Notes, against payment in same-day funds on or about February 18, 2020, which we expect will be the fifth
business day following the date of this prospectus supplement, referred to as "T+5." You should note that initial trading of the Notes may be affected
by the T+5 settlement. See "Underwriting--Delivery of the Notes."

Underwriting

KDB Asia Limited, one of the underwriters, is our affiliate and has agreed to offer and sell the Notes only outside the United States to non-U.S.
persons. See "Underwriting--Relationship with the Underwriters."

S-6
Table of Contents
USE OF PROCEEDS

The net proceeds from the issue of the Notes, after deducting the underwriting discount but not estimated expenses, will be US$1,493,182,500. We
will use the net proceeds from the sale of the Notes for our general operations, including extending foreign currency loans and repayment of our maturing
debt and other obligations.

S-7
Table of Contents
RECENT DEVELOPMENTS

This section provides information that supplements the information about our bank and the Republic included under the headings corresponding to
the headings below in the accompanying prospectus dated June 19, 2019. Defined terms used in this section have the meanings given to them in the
accompanying prospectus. If the information in this section differs from the information in the accompanying prospectus, you should rely on the
information in this section.

THE KOREA DEVELOPMENT BANK

Unless specified otherwise, the information provided below is stated on a separate basis in accordance with Korean IFRS.

Overview

As of June 30, 2019, we had W138,847.3 billion of loans outstanding (including loans for facility development, loans for working capital, loans for
households, inter-bank loans, private loans, off-shore loan receivables, loans borrowed from overseas financial institutions, bills bought in foreign
currencies, advance payments on acceptances and guarantees and other loans without adjusting for allowance for loan losses, present value discounts and
deferred loan fees), total assets of W221,319.8 billion and total equity of W25,913.4 billion, as compared to W137,775.6 billion of loans outstanding,
W209,774.8 billion of total assets and W24,985.2 billion of total equity as of December 31, 2018. For the six months ended June 30, 2019, we recorded
interest income of W2,581.2 billion, interest expense of W2,063.8 billion and net income of W529.1 billion, as compared to W2,491.8 billion of interest
income, W1,855.3 billion of interest expense and W520.3 billion of net income for the six months ended June 30, 2018.

Capitalization

As of September 30, 2019, our authorized capital was W30,000 billion and our capitalization was as follows:

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424(B)(2)


September 30, 2019(1)


(billions of Won)



(unaudited)

Long-term debt(2)(3):

Won currency borrowings


3,659.5
Foreign currency borrowings


3,782.3
Won currency industrial finance bonds


94,487.8
Foreign currency industrial finance bonds


25,945.9




Total long-term debt


127,875.5




Capital:

Issued capital


18,663.1
Capital surplus


2,494.8
Retained earnings(4)


4,689.6
Accumulated other comprehensive income


38.6




Total capital


25,886.1




Total capitalization


153,761.6





(1)
Except as disclosed in this prospectus supplement, there has been no material change in our capitalization since September 30, 2019.
(2)
We have translated borrowings in foreign currencies into Won at the rate of W1,201.30 to US$1.00, which was the market average exchange rate, as
announced by the Seoul Money Brokerage Services Ltd., on September 30, 2019.


S-8
Table of Contents
(3)
As of September 30, 2019, we had contingent liabilities totaling W8,078.2 billion under outstanding guarantees issued on behalf of our clients.
(4)
Includes planned regulatory reserve for loan losses of W1,227.7 billion as of September 30, 2019. Under K-IFRS, if our provision for loan losses is
deemed insufficient for regulatory purposes, we compensate for the difference by recording a regulatory reserve for loan losses, which is shown as a
separate item included in retained earnings.

Business

Government Support and Supervision

The Government contributed W500 billion and W55 billion in cash to our capital in March and September 2019, respectively. As of September 30,
2019, our paid-in capital was W18,663.1 billion compared to W18,108.1 billion as of December 31, 2018.

Selected Financial Statement Data

Recent Developments

As of September 30, 2019, we had W141,472.4 billion of loans outstanding (including loans for facility development, loans for working capital,
loans for households, inter-bank loans, private loans, off-shore loan receivables, loans borrowed from overseas financial institutions, bills bought in
foreign currencies, advance payments on acceptances and guarantees and other loans without adjusting for allowance for possible loan losses, present value
discounts and deferred loan fees), total assets of W222,909.3 billion and total equity of W25,886.1 billion, as compared to W137,775.6 billion of loans
outstanding, W209,774.8 billion of total assets and W24,985.2 billion of total equity as of December 31, 2018, on a separate K-IFRS basis. For the nine
months ended September 30, 2019, we recorded interest income of W3,861.5 billion, interest expense of W3,083.1 billion and net income of
W431.6 billion, as compared to W3,833.0 billion of interest income, W2,872.6 billion of interest expense and W852.0 billion of net income for the nine
months ended September 30, 2018, on a separate K-IFRS basis.

The following tables present our selected separate financial information for the nine months ended September 30, 2018 and 2019 and as of
December 31, 2018 and September 30, 2019, which has been derived from our unaudited separate financial statements as of December 31, 2018 and
September 30, 2019 and for the nine months ended September 30, 2018 and 2019 prepared in accordance with K-IFRS.

Separate K-IFRS Financial Statement Data

Nine Months Ended


September 30,



2018

2019

(billions of Won)


(unaudited)

Income Statement Data


Total Interest Income

3,833.0 3,861.5
Total Interest Expenses

2,872.6 3,083.1
Net Interest Income


960.4
778.4
Operating Income

1,445.6
839.0
Net Income


852.0
431.6
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424(B)(2)

S-9
Table of Contents
As of
As of


December 31, 2018
September 30, 2019
(billions of Won)


(unaudited)

Balance Sheet Data


Total Loans(1)


137,775.6

141,472.4
Total Borrowings(2)


173,706.1

179,492.9
Total Assets


209,774.8

222,909.3
Total Liabilities


184,789.5

197,023.2
Equity


24,985.2

25,886.1

(1)
Gross amount, which includes loans for facility development, loans for working capital, loans for households, inter-bank loans, private loans,
off-shore loan receivables, loans borrowed from overseas financial institutions, bills bought in foreign currencies, advance payments on acceptances
and guarantees and other loans without adjusting for allowance for loan losses, present value discounts and deferred loan fees.
(2)
Total Borrowings include deposits, financial liabilities measured at fair value through profit or loss, borrowings and debentures.

Nine Months Ended September 30, 2019

For the nine months ended September 30, 2019, we had net income of W431.6 billion compared to net income of W852.0 billion for the nine
months ended September 30, 2018, on a separate K-IFRS basis.

Principal factors for the net income of W431.6 billion for the nine months ended September 30, 2019 compared to the net income of W852.0 billion
in the corresponding period of 2018 included:

·
an increase in impairment losses on investments in subsidiaries and associates to W504.9 billion in the nine months ended September 30, 2019

from W202.2 billion in the corresponding period of 2018, primarily due to an increase in impairment losses with respect to our investment in
Daewoo Shipbuilding & Marine Engineering Co., Ltd. ("DSME") during the nine months ended September 30, 2019;

·
an increase in net loss on derivatives to W265.4 billion in the nine months ended September 30, 2019 from W16.8 billion in the corresponding

period of 2018, primarily due to fluctuations in the value of perpetual bonds issued by Hyundai Merchant Marine Co., Ltd., which we held
through a derivatives contract we entered into with a third party in connection with the purchase of such bonds;

·
a decrease in dividend income to W490.9 billion in the nine months ended September 30, 2019 from W682.8 billion in the corresponding

period of 2018, primarily due to a decrease in dividend income received with respect to our investments in subsidiaries and associates,
including Korea Electric Power Corporation and Korea Land & Housing Corporation; and

·
a decrease in net interest income to W778.4 billion in the nine months ended September 30, 2019 from W960.4 billion in the corresponding

period of 2018, primarily due to increases in interest expenses on deposits and debentures.

The above factors were partially offset by a decrease in income tax expense to W54.3 billion in the nine months ended September 30, 2019 from
W439.1 billion in the corresponding period of 2018, primarily due to a decrease in profit before income taxes to W485.8 billion in the nine months ended
September 30, 2019 from W1,291.0 billion in the corresponding period of 2018.

Loans to Financially Troubled Companies

We have credit exposure (including loans, guarantees and equity investments) to a number of financially troubled Korean companies including
DSME, STX Offshore & Shipbuilding, Dongbu Steel Co., Ltd., Hanjin

S-10
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Heavy Industries and Construction Co., Ltd., Hyundai Merchant Marine Co., Ltd., Daehan Shipbuilding Co., Ltd., Asiana Airlines, Inc. and STX Heavy
Industries Co., Ltd. As of September 30, 2019, our credit extended to these companies totaled W12,377.2 billion, accounting for 5.6% of our total assets as
of such date.

As of September 30, 2019, our exposure (including loans classified as substandard or below and equity investment classified as estimated loss or
below) to DSME increased to W5,841.1 billion from W4,263.2 billion as of December 31, 2018, primarily due to an increase in valuation of shares of
common stock of DSME. As of September 30, 2019, our exposure to STX Offshore & Shipbuilding was W981.4 billion, a decrease from W1,029.9 billion
as of December 31, 2018, principally due to the repayment of certain existing loans. As of September 30, 2019, our exposure to Dongbu Steel decreased to
W897.6 billion from W1,189.9 billion as of December 31, 2018, mainly due to the repayment of, and an improvement in the asset quality of, certain
existing loans. As of September 30, 2019, our exposure to Hanjin Heavy Industries and Construction decreased to W1,041.1 billion from W1,233.1 billion
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424(B)(2)
as of December 31, 2018, primarily due to the repayment of, and an improvement in the asset quality of, certain existing loans. As of September 30, 2019,
our exposure to Hyundai Merchant Marine decreased to W1,513.2 billion from W1,818.6 billion as of December 31, 2018, principally due to the
repayment of certain existing loans. As of September 30, 2019, our exposure to Daehan Shipbuilding increased to W1,023.8 billion from W986.0 billion as
of December 31, 2018, primarily due to an increase in the amount of loans we extended. As of September 30, 2019, our exposure to Asiana Airlines
increased to W868.9 billion from W484.4 billion as of December 31, 2018, primarily due to our purchase of perpetual bonds issued by Asiana Airlines in
April 2019. As of September 30, 2019, our exposure to STX Heavy Industries decreased to W54.0 billion from W138.4 billion as of December 31, 2018,
mainly due to the repayment of certain existing loans.

As of September 30, 2019, we had established allowances of W1,303.4 billion for our exposure to DSME, W831.2 billion for STX Offshore &
Shipbuilding, W135.5 billion for Dongbu Steel, W182.3 billion for Hanjin Heavy Industries and Construction, W127.9 billion for Hyundai Merchant
Marine, W410.9 billion for Daehan Shipbuilding, W2.3 billion for Asiana Airlines and W54.0 billion for STX Heavy Industries.

In the event that the financial condition of these companies or other large corporations to which we extended credits deteriorate in the future, we may
be required to record additional allowances for credit losses, as well as charge-offs and valuation or impairment losses or losses on disposal, which may
have a material adverse effect on our financial condition and results of operations.

In the nine months ended September 30, 2019, we sold non-performing loans worth W244.8 billion to UAMCO Ltd.

Results of Operations

The following tables present our selected separate financial information as of December 31, 2018 and June 30, 2019 and for the six months ended
June 30, 2018 and 2019, which has been derived from our unaudited separate financial statements as of June 30, 2019 and December 31, 2018 and for the
six months ended June 30, 2019 and 2018 prepared in accordance with K-IFRS and included in this prospectus supplement.

Separate K-IFRS Financial Statement Data

Six Months Ended


June 30,



2018

2019

(billions of Won)


(unaudited)

Income Statement Data


Total Interest Income

2,491.8 2,581.2
Total Interest Expenses

1,855.3 2,063.8
Net Interest Income


636.5
517.4
Operating Income

1,012.9
732.4
Net Income


520.3
529.1

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Table of Contents
As of
As of


December 31, 2018
June 30, 2019
(billions of Won)


(unaudited)

Statements of Financial Position Data


Total Loans(1)


137,775.6
138,847.3
Total Borrowings(2)


173,706.1
175,825.8
Total Assets


209,774.8
221,319.8
Total Liabilities


184,789.5
195,406.4
Equity


24,985.2
25,913.4

(1)
Gross amount, which includes loans for facility development, loans for working capital, inter-bank loans, private loans, off-shore loan receivables,
loans borrowed from overseas financial institutions, bills bought in foreign currencies, advance payments on acceptances and guarantees and other
loans without adjusting for allowance for loan losses, present value discounts and deferred loan fees.
(2)
Total borrowings include financial liabilities designated at fair value through profit or loss due to customers, borrowings and debt issued.

Six Months Ended June 30, 2019

In the first half of 2019, we had net income of W529.1 billion compared to net income of W520.3 billion in the corresponding period of 2018, on a
separate basis, primarily due to an income tax benefit of W0.1 billion in the first half of 2019 compared to an income tax expense of W299.2 billion in the
corresponding period of 2018. Such change in income tax expense was attributable mainly to the recognition of losses carried over from previous years for
income tax purposes as a result of the recognition of deferred income tax assets in the first half of 2019. The effect of such change was mostly offset by an
increase in impairment losses on investments in subsidiaries and associates to W484.7 billion in the first half of 2019 from W216.7 billion in the
corresponding period of 2018, primarily due to an increase in impairment losses with respect to our investment in Daewoo Shipbuilding & Marine
Engineering Co., Ltd., or DSME, in the first half of 2019.

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424(B)(2)
Provisions for Possible Loan Losses and Loans in Arrears

As of June 30, 2019, we had established allowances for loan losses of W3,356.0 billion under Korean IFRS. Allowances for loan losses under
Korean IFRS are recorded for loans based on expected credit losses, depending on whether there has been a significant increase in credit risk or a credit
impairment since initial recognition and, if our allowance for loan losses is deemed insufficient for regulatory purposes, we compensate for the difference
by recording a regulatory reserve for loan losses within retained earnings.

Certain of our customers have restructured loans with their creditor banks. As of June 30, 2019, we have provided loans of W2,200.1 billion for
companies under workout, court receivership, court mediation and other restructuring procedures. As of June 30, 2019, we had established allowances for
loan losses of W1,022.1 billion with respect to such companies. We cannot assure you that actual credit losses from the loans to these customers will not
exceed the allowances established.

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The following table provides information on our loan loss allowances.





As of June 30, 2019(1)

Loan Loss




Loan Amount
Allowances




(in billions of Won, except percentages)
Loan Classification

Normal(2)

W 131,213.7
W 373.9

Precautionary


3,631.3

528.6

Substandard


2,615.3
1,407.0

Doubtful


210.0

120.5

Expected Loss


1,177.0

926.0










Total

W 138,847.3
W3,356.0









(1)
These figures include loans for facility development, loans for working capital, inter-bank loans, private loans, off-shore loan receivables, loans
borrowed from overseas financial institutions, bills bought in foreign currencies, advance payments on acceptances and guarantees and other loans.
(2)
Includes loans guaranteed by the Government. Under Korean IFRS, we establish loan loss allowances for all loans including loans guaranteed by the
Government.
(3)
See note 2 of the notes to our separate financial statements in the accompanying prospectus for a summary of significant accounting policies with
respect to impairment of loans.

As of June 30, 2019, our non-performing loans totaled W4,002.3 billion, representing 2.9% of our outstanding loans as of such date.
Non-performing loans are defined as loans that are classified as substandard or below. On June 30, 2019, our legal reserve was W1,177.9 billion,
representing 0.8% of our outstanding loans as of such date.

Loans to Financially Troubled Companies

We have credit exposure (including loans, guarantees and equity investments) to a number of financially troubled Korean companies including
DSME, STX Offshore & Shipbuilding, Dongbu Steel Co., Ltd., Hanjin Heavy Industries and Construction Co., Ltd., Hyundai Merchant Marine Co., Ltd.,
Daehan Shipbuilding Co., Ltd., Hanjin Shipping Co., Ltd., STX Heavy Industries Co., Ltd. and Asiana Airlines, Inc. As of June 30, 2019, our credit
extended to these companies totaled W12,705.1 billion, accounting for 5.7% of our total assets as of such date.

As of June 30, 2019, our exposure (including loans classified as substandard or below and equity investment classified as estimated loss or below) to
DSME increased to W5,872.4 billion from W4,263.2 billion as of December 31, 2018, primarily due to an increase in valuation of shares of common stock
of DSME. As of June 30, 2019, our exposure to STX Offshore & Shipbuilding was W966.4 billion, a decrease from W1,029.9 billion as of December 31,
2018, principally due to the repayment of certain existing loans. As of June 30, 2019, our exposure to Dongbu Steel increased to W1,223.7 billion from
W1,189.9 billion as of December 31, 2018, mainly due to an increase in the Won value of foreign currency loans as a result of the depreciation of the Won
against foreign currencies. As of June 30, 2019, our exposure to Hanjin Heavy Industries and Construction decreased to W1,094.9 billion from
W1,233.1 billion as of December 31, 2018, primarily due to the repayment of certain existing loans. As of June 30, 2019, our exposure to Hyundai
Merchant Marine decreased to W1,618.8 billion from W1,818.6 billion as of December 31, 2018, principally due to the repayment of certain existing loans.
As of June 30, 2019, our exposure to Daehan Shipbuilding decreased slightly to W985.5 billion from W986.0 billion as of December 31, 2018, primarily
due to a small decrease in the valuation of collateral. As of June 30, 2019, our exposure to Hanjin Shipping remained unchanged compared to
December 31, 2018 at W60.1 billion. As of June 30, 2019, our exposure to STX Heavy Industries decreased to W54.0 billion from W138.4 billion as of
December 31, 2018, primarily due to the repayment of certain existing loans. As of June 30, 2019, our exposure to Asiana Airlines increased to
W829.3 billion from W484.4 billion as of December 31, 2018, primarily due to our purchase of perpetual bonds issued by Asiana Airlines in April 2019.

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424(B)(2)
As of June 30, 2019, we had established allowances of W1,014.0 billion for our exposure to DSME, W840.3 billion for STX Offshore &
Shipbuilding, W556.2 billion for Dongbu Steel, W165.9 billion for Hanjin Heavy Industries and Construction, W112.3 billion for Hyundai Merchant
Marine, W489.3 billion for Daehan Shipbuilding, W40.6 billion for Hanjin Shipping, W54.0 billion for STX Heavy Industries and W1.1 billion for Asiana
Airlines.

In the event that the financial condition of these companies or other large corporations to which we extended credits deteriorates in the future, we
may be required to record additional allowances for credit losses, as well as charge-offs and valuation or impairment losses or losses on disposal, which
may have a material adverse effect on our financial condition and results of operations.

In the first half of 2019, we sold non-performing loans worth W244.8 billion to UAMCO Ltd.

Operations

Loan Operations

The following table sets out, by currency and category of loan, our total outstanding loans as of June 30, 2019:

Loans(1)



June 30, 2019


(billions of Won)
Equipment Capital Loans:

Domestic currency

W
45,663.3
Foreign currency(2)


6,151.8






51,815.1
Working Capital Loans:

Domestic currency(3)


51,622.9
Foreign currency(2)


7,084.3






58,707.2
Other Loans(4)


28,325.0




Total loans

W 138,847.3

(1)
Includes loans extended to affiliates.
(2)
Includes loans disbursed and repayable in Won, the amounts of which are based upon an equivalent amount of foreign currency. This type of loan
totaled W41.6 billion as of June 30, 2019. See "The Korea Development Bank--Operations--Loan Operations--Loans by Categories--Local
Currency Loans Denominated in Foreign Currencies" in the accompanying prospectus.
(3)
Includes loans on households.
(4)
Includes inter-bank loans, private loans, off-shore loan receivables, loans borrowed from overseas financial institutions, bills bought in foreign
currencies, advance payments on acceptances and guarantees and other loans.

As of June 30, 2019, we had W138,847.3 billion in outstanding loans, which represents a 0.8% increase from W137,775.6 billion of outstanding
loans as of December 31, 2018.

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Maturities of Outstanding Loans

The following table categorizes our outstanding equipment capital and working capital loans by their remaining maturities:

Outstanding Equipment Capital and Working Capital Loans by Remaining Maturities(1)

As % of
June 30,
June 30, 2019


2019

Total



(billions of Won, except percentages)

Loans with remaining maturities of one year or
less

W
3,349.0

3.0%
Loans with remaining maturities of more than one
year


107,173.3

97.0








Total

W
110,522.3

100.0%









(1)
Includes loans extended to affiliates.

Loans by Industrial Sector

The following table sets out the total amount of our outstanding equipment capital and working capital loans, categorized by industry sector as of
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