Woori Bank 2011 Annual Report

our bank, your confidence
2011 annual report
Contents
01
our bank, your confidence

04 _ about Life, about Confidence 06 _ Special Customer Interview 16 _ our Bank, your Confidence 18 _ Message from the CEO 22 _ Financial Highlights 24 _ News Highlights 26 _ Board of Directors & Managements 28 _ Corporate Governance
30
developing confidence
32 _ Risk Management 34 _ Happier Customers 36 _ Ethical Management 38 _ Global Business
40
experiencing confidence
43 _ Retail Banking 45 _ Private Banking 46 _ U-Banking / Smart Banking 47 _ SME Banking 48 _ Corporate Banking 49 _ Credit Card 50 _ Investment Banking 51 _ Trading & Derivatives 52 _ Retirement Pension 53 _ Product Development
54 64
sustaining confidence
57 _ Creating Financial Opportunities (Microcredit) 60 _ Inspiring Our People 62 _ Sharing Hearts
financial review
65 _ Managements Discussion and Analysis 69 _ Independent Auditors Report 158 _ Organization Chart 160 _ Global Networks
ContaCt information
Directed by Kim, Eun Kyung(Christine) IR Manager, tel: 82-2-2002-3186, ekk@wooribank.com
Created by Lucre Beyond Inc. www.lucrebeyond.com
what makes you confident in life ?
about
life
Our dedicated team of employees develops and delivers financial products and services of the highest standard. We do all we can to further improve those standards, and we take pride in helping to make life happier and more confident for all our customers, in Korea and around the world.
04 05 _ 2011 ANNUAL REPORT
about
confidence
Confidence is a fundamental human emotion, a building block for happiness in life. At Woori Bank, Our Bank takes prides in ensuring Your Confidence.
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Choi, Jung Min 36-year-old housewife Haeundae-gu, Busan
OUR bANk, yOUR cONfidENcE
As a mother of a child, I naturally prioritize the happiness and the welfare of my child over all other issues, especially in regards to readily preparing for my sons future career. When I become financially stable, I know I am going to feel more confident in guaranteeing him a stable future.
Woori Bank has a wide variety of products for parents who are deciated in providing their children with long-term financial well-being. These include Woori Children Love Bank-book, Mothers Savings Account, and Children-Love Card.
prepared.
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smart.
I dream of becoming a respectable university professor like Michael J. Sandel after studying abroad. Although it still seems distant, I go to the university library and study hard every day to achieve my goal of becoming a well-known professor who teaches at one of the top universities in the world. And I want to be smart in reaching my goal. Saving money has become second nature to me in achieving my dreams. Wouldnt it be exciting to see those dreams come true?
Woori Bank supports the dreams of young people as they move forward in their lives. We offer Woori Student Loan for Studying Abroad, Magic 7 Savings, and My Style Free Savings. We offer them opportunities through customized products to save at a high interest rate, and also provide student loans for tuition fees, so their dreams are never abandoned due to financial constraints. We offer confidence to back up the dreams of youth.
Cha, Jung Ha 21-year-old university student Seodaemoon-gu, Seoul
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sustainable.
Meeting buyers from all over the world these days, I am thankful for my current business development worldwide. I still remember the initial stage of my business with only handful of local buyers and limited financial support. But now business definitely flourished much stronger with growing global networks. I feel proud of my success in business and I dream of leading a truly global company one day.
Woori Bank offers loan products like We Dream Loan and Safe e-Purchasing Card Loans to help promising companies continue to grow and succeed. Any company can prosper with the help of its community and valuing our role in that community, Woori Bank is pleased to serve as a reliable partner for all our customers.
Lee, Jong Hee 48-year-old CEO Gangnam-gu, Seoul
trusted.
My wife and I opened a coffee shop after I retired from a company working as a full-time employee for over 30 years. I was afraid of trying something new in my 50s, but after becoming a Barista, one of my happiest moments now is enjoying and serving a cup of fresh morning coffee. I have my own shop to take care of and I am able to work flexibly according to my needs. So this was definitely the right choice. There is a Korean saying that those who dream, and strive for something new in life, give more than those who stand still; that definitely holds true for me.
Woori Bank offers various products, such as Woori Franchise Loan, SOHO Plus Loan and Woori Partners Card, to support those who are starting up a new business. We will strive to offer them products that meet their every need, so that new entrepreneurs can enjoy a more prosperous and successful life.
Kim, Won Sup 52-year-old coffee shop owner Chung-gu, Ulsan
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secured.
Park, Jeong Ja 61-year-old former teacher Suwon Gyeonggi Province
In every spring, I am thrilled to breathe in a fresh spring scent and bathe in the shining sunlight. As I walk with my husband, along a boulevard dotted with trees, I am nostalgic of my life in youth and imbue new hopes for my life ahead. When the average life span is 100, I think I am still very young. Unlike the past, many silver generations, like me, seem to positively gear up for their post-retirement life to start a life anew. I will continue to make steady investment for my life ahead to enhance financial stability.
Woori Bank offers diverse products to help customers who plan to better prepare their post-retirement lives. These include Happy Life Retirement Pension Bank-book, Retirement Pensions, and Interest-Prepaid Time Deposit.
It takes a corporate culture that is steeped in the highest standards to foster genuine teamwork and commitment to the best possible service.
As the first bank to be established in Korea, and having served our customers for 113 years, we have overcome innumerable challenges along the way. And we are once again facing uncertain economic times.
,knab ruo
our bank,
Our common goal to keep creating customer happiness is the key to the special dedication, the special creativity, and the special sense of responsibility shared by everyone at Woori Bank. And it is this common goal that drives us to excellence in banking. We aspire to be the undisputed No.1 Bank in Korea, and the most globally diverse as well; that means that our quality, even now, must take another step. Our ceaseless efforts to get better strengthen the confidence of our staff and the confidence of our customers.
your confidence ecnedifnoc ruoy
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Message from the CEO
Supported by the trust of our customers, we are the representative traditional Korean bank with the longest history for over 113 years. By sharing our hearts harmoniously, we promise we will continue to fulfill our greater financial duties in enriching the nation and the national economy, as well as our social responsibilities in supporting the society in need.
dear customers,
I would like to extend my sincere thanks to all our customers for giving Woori Bank your trust and commitment over the past years. In 2011, Woori Bank achieved net income of KRW 2,069 billion, up KRW 808 billion from the previous year, and net interest income and non-interest income of KRW 5,200 billion and KRW 1,063 billion respectively, despite the continued economic downturn at home and abroad and ever-fiercer competition in the market. This reaffirmed our solid profit structure and business capabilities. Moreover, our BIS capital adequacy ratio reached 13.78% and the ROA and ROE profitability indicators stood at 0.59% and 7.93% respectively, levels which confirm our presence as a leading domestic bank. Meanwhile, our constant efforts to clean up our balance sheet significantly improved the Banks Non Performing Loan(NPL) ratio, to 1.65% as of year-end 2011, down from 3.34% as of year-end 2010. We will continue to effectively manage asset soundness in 2012. The financial environment in 2012 will not be easy. As the financial crisis in Europe and the wider global economic downturn continue, delays in the domestic economic recovery and possible household defaults put greater emphasis on risk management. In particular, because only four major commercial banks dominate the banking sector, competition is expected to grow fiercer.
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No.1
the No.1 bank in Korea, but also amongst the top 10 in Asia.
fundamentally strong and profit-oriented management.
Woori Bank has set itself a medium to long-term goal of becoming not only
We will make sure that 2012 will be a year when uncertainties and crises become opportunities by fostering a sense of unity among all 15,000 staff, and by implementing
We will undertake preemptive risk management by preparing ourselves against economic uncertainties and greater volatility, diversify our foreign currency financing structure to ensure stable liquidity management, and do our utmost to manage our loan-deposit ratio. We are committed to expanding our network at home and abroad, exploring new market and new businesses opportunities. Meanwhile, net interest margin(NIM) will be maintained at a high level, profit structure will be stabilized by raising non-interest income(such as fee revenues), and profit oriented growth will continue by focusing on prominent customers/ assets. Our Bank will return the love that customers have given to us to the society as a whole. We will also expand our support in helping the temporarily troubled or tobe reorganized SMEs. Furthermore, the Bank will act as a microcredit lender in cooperation with Woori Miso Financial Foundation, and will help the underprivileged through a strong commitment to social contribution activities. We promise to fulfill our role and responsibilities as a bank that enriches the nation and the national economy. We have shared growth for 113 years, and this would not have been possible without the love and support of our customers.
Supported by the trust of our customers, we are the representative traditional Korean bank with the longest history for over 113 years. By sharing our hearts harmoniously, we promise we will continue to fulfill our greater financial duties in enriching the nation and the national economy, as well as our social responsibilities in supporting the society in need. Woori Bank has set itself a medium to long-term goal of becoming not only the No.1 bank in Korea, but also amongst the top 10 in Asia. We will not only become a bank that represents Korea, but also a world class bank that broadens its financial horizon based on the nations largest overseas network and a competitive workforce. I would like to ask for your continued encouragement and support as we seek to achieve our vision of becoming the No.1 Bank in Korea. Please accept my warmest wishes for your health and happiness throughout the year.
Thank you.
Lee, Soon Woo

President and Chief Executive Officer
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Financial Highlights
2,069
net income (Unit: KRW billion) 2009 2010 2011 0.59 0.49
954
1,261
242,472
total assets (Unit: KRW billion) 2009 2010 2011 7.98 14.65 7.32 7.93 13.78
0.59
roa (Unit: %) 2009 2010 2011 11.40 10.40 10.74
0.41
7.93
roe (Unit: %) 2009 2010 2011 14.39
10.74
tier i ratio (Unit: %) 2009 2010 2011
13.78
bis ratio (Unit: %) 2009 2010 2011
226,927
228,555
242,472
2,069
balance sheet (Unit: KRW billion) 2009 Total Assets Cash Financial Assets Loans and Receivables Associates Tangible & Others Total Liabilities Deposits Borrowings Debentures Other Liabilities Total Shareholders' Equity
* Bank account only under K-IFRS
2010 228,555 3,886 43,634 177,631 306 3,098 211,068 157,314 18,983 20,192 14,578 17,487
2011 242,472 5,389 41,389 191,909 376 3,409 224,346 164,092 19,174 19,812 21,267 18,126
Change (2010 VS 2011) 13,917 1,503 (2,245) 14,278 70 311 13,278 6,778 191 (380) 6,689 639
226,927 3,728 41,564 178,161 249 3,225 210,007 150,125 20,752 23,476 15,654 16,920
income statement (Unit: KRW billion) Net interest income Non-interest income Fees & Commissions Revenues on Securities Gain on FX/Derivative Transaction Trust Income Revenues from Merchant Banking Gains on investment Securities Operating Revenue Credit Cost SG&A Expenses Non-Operating Income income before income Tax Expense Gain on equity method Investments Income Tax Expense Net income
K-GAAP 2009 3,749 958 497 152 132 44 132 468 5,175 2,064 2,076 154 1,189 235 954
K-IFRS 2010 4,488 1,083 455 330 187 45 65 793 6,364 2,560 2,264 (4) 1,537 1 275 1,261 2011 5,200 1,063 459 271 249 39 44 837 7,099 1,964 2,553 76 2,659 1 590 2,069 Change (2010 VS 2011) 712 (20) 4 (59) 62 (6) (21) 44 735 (596) 289 80 1,122 0 315 808
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News Highlights
Lee, Soon Woo Appointed as the 47th President and Chief Executive Officer of Woori Bank
March 24 th, 2011
Woori Bank was awarded No.1 Korean Bank of the Year for Second Straight Year by The Banker
November 30th, 2011
Lee, Soon Woo was appointed as the 47th President and Chief Executive Officer of Woori Bank on March 24th, 2011. He said in his inauguration speech, I feel honored and gratified to serve Woori Bank. Lets make sure that we become the No.1 bank in Korea, and then move beyond that, to become a leading bank in Asia and beyond. CEO Lee, Soon Woo noted the 5 keyword of management, Customer First, Site-oriented Management, Ethical/Moral Business(Proper Sales), Glocaliztion and Risk Management & Clean up of our Bad Assets. He also added Lets make our workplace a joyful one, so that our staff cannot wait for Monday to come. He emphasized the concept of People First, saying that our bank should prioritize staff satisfaction first and our staff in return should do their utmost to achieve customer satisfaction. He formed and managed a new Task Force of Management Innovation for two months after he was inaugurated, and announced new Customer and Site-oriented Management Innovation Measures on June 10 th, 2011. On the same day, he designated Customer First and Site-oriented Management as management measures. Woori Bank also introduced a new slogan, The Bank for Customer Convenience, which shows clearly where our priorities lie. Our new CEO has also emphasized his personal commitment of making Woori Bank the No.1 bank in Korea, which refers to becoming the representative bank of Korea on a global basis.
Woori Bank was chosen No.1 Korean Bank of the Year by The Banker. The Banker is the renowned financial magazine published by the Financial Times and is noted for announcing the worlds top 1,000 banks as well as giving awards to the designated No.1 bank in each country. The magazine cited Woori Banks growth of financial performance and shareholder value over the past three years, strategies to gain market dominance, efforts to support SMEs, and outstanding achievements compared to the competitors as determining factors in its selection, following the same award in 2010. This selection reaffirmed the excellence of Woori Bank. In 2012, we will continue to build a position as a leading bank in Asia. Woori Bank was designated as the Bank of the Year in 2004, 2007, 2008, 2010 and 2011. Woori Financial Group ranked No.1 in Korea, and No.72 among the worlds top 1,000 banks as chosen by The Banker in terms of Tier 1 Capital, as of 2010end.
Winning the Top Customer Satisfaction Ranking and Inducted into KMACs Hall of Fame
November 2nd, 2011
Woori Bank received its fifth consecutive Grand Prize for customer satisfaction management from Korea Management Association Consulting (KMAC), and was inducted into KMACs Hall of Fame. This is attributable to customers trust in a bank with a 113-year history and a tradition of customer service. President & CEO Lee, Soon Woos strong commitment to customer service has been strongly communicated to all staff since 2009, and the Bank has continuously put into action its mission to become The Bank for Customer Convenience.
2011
The Hanmaeum (One Heart) Walk through Korea

July 1st 23rd, 2011
Smart Banking One-Touch Service, Ranks First in the Banking Sector of the Korea Smart App Assessment Index
June 28th, 2011
Woori Bank conducted the Hanmaeum (One Heart) Walk through Korea from July 1st 23rd, 2011, where 112 staff walked together to mark the 112th anniversary of Woori Bank. The walkathon started at Haenam, the southernmost tip of the country, in South Jeolla Province, and passed through Suncheon, Jinju, Gumi, Daejeon, Cheonan, Suwon and Incheon. The final destination was KINTEX, Ilsan where the Banks management strategy meeting for the latter half of 2011 was held. The walkathon covered some 720 km, and the 112 participants walked 50 - 70km each for two days and one night in a relay format. Despite the heavy rain and sizzling heat of a Korean summer, the participating staff were proud of their success, representing the Banks No. 1 spirit of challenge.
Woori Banks smart banking one-touch service was ranked first in the banking sector of the Korea Smart App Assessment Index (KSAAI), coorganized by Sookmyung Womens Universitys Web Development Research Institute and the Electronic Times.
The KSAAI is an assessment index covering five categories business, customer immersion, content, design and technology. The Bank has a dominant position as No.1 bank in the business and technology sectors, and ended up as the first in the overall score. In particular, in the business category, the Bank gained high scores through convenience and user-friendliness in money transfers and also earned high scores by its commitment to take the visually impaired needs into consideration when designing and implementing this app.
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Board of Directors & Management
STANdINg dIRECTORS
Kim, Yong Woo

Standing Audit committee Member / director 2 Deputy Secretary General, The Board of Audit and Inspection of Korea Deputy Director, The Board of Audit and Inspection of Korea Passed the 23rd National Administrative Examination M.A. in Public Administration, Syracuse University B.A. in Economics, Yonsei University
nd
Lee, Soon Woo

President and cEO
Deputy President / Director Deputy President & Head, Consumer Banking Business Unit, Woori Bank Executive Vice President, Consumer Banking Business Unit, Woori Bank Executive Vice President, Management Support Unit, Woori Bank Head, Corporate Financial Unit, Hanvit Bank MBA, Korea University Business School B.A. in Laws, Sungkyunkwan University

Kim, Yang Jin

deputy President / director Currently Senior Managing Director, Woori Financial Group Executive Vice President, Operation & Support Unit, Woori Bank Compliance Officer, Woori Bank Senior Relationship Manager, Jung-ang Corporate Banking Center, Woori Bank Head, Synergy Promotion Dept, Woori Bank B.A. in Agricultural Education, Seoul National University

NON-STANdINg dIRECTOR
OuTSIdE dIRECTORS
Lee, Pal Seung

Currently Chairman & CEO, Woori Financial Group Currently President, Woori Multicultural Scholarship Foundation CEO, Seoul Philharmonic Orchestra President & CEO, Woori Investment & Securities Managing Director, Hanil Bank AIM(Advanced Information Management) Program, KAIST MBA, Korea University B.A. in Laws, Korea University

Lee, Yong Keun

Adviser, Korea Anderson Group 2nd President, Financial Supervisory Commission and President of Financial Supervisory Service Executive Director, Asia Development Bank Passed the 9th National Administrative Examination, Division of Finance and Economy Ph.D in Public Administration, Han Yang University M.A. in Economics, Institute of Social Studies, The Netherlands M.A. in Public Administration, Seoul National University

Eun, Soong Pyo

Currently Professor, Law School, Yeungnam University Currently Vice Chairman, Korea Public Land Law Association Inc Professor, Department of Police and Criminal Justice, Silla University Bank of Korea Ph.D in Laws, University Tbingen, Germany

B.A. in Laws, Yonsei University
Kim, Jung Sik

Currently Dean, College of Business & Economics, Yonsei University Currently Dean, Graduate School of Economics, Yonsei University Currently Chairman, Korea International Finance Association Managing Director, Korea Money & Finance Association Professor, College of Business & Economics, Yonsei University Ph.D. in Economics, Claremont Graduate University M.A. in Economics, Yonsei University

B.A. in Economics, Korea University
Lee, Kwi Nam

Currently Attorney, LKN Law Institute 61st Minister, Ministry of Justice Republic of Korea Vice Minister, Ministry of Justice Republic of Korea Passed the 22nd National Bar Exam

B.A. in Public Administration, Korea University
Yoo, Kwan Hee

Currently Chairman, Korean Academic Society of Business Administration Currently Professor, Business Administration and Management, Korea University Chairman, Korean Association of Small Business Studies Ph.D in Business Administration and Management, Indiana State University M.A. in Business Administration and Management, Indiana State University B.A. in Business Administration and Management,

B.A. in Economics, Yonsei University
Chai, Hee-yul
Currently Professor, College of Economics, Kyonggi University Non-standing member, Financial Supervisory Commission Associate professor, Universite de Lille, France Ph.D in Economics, LUniversit de Paris X, France M.A. in Economics, Seoul National University

B.A. in Economics, Seoul National University
Seoul National University
Chung, Wook Ho
Currently Head, Department of Special Asset Korea Deposit Insurance Corporation (KDIC) Head, Department of Risk Management, KDIC Head, Department of Asset Recovery Department, KDIC B.A. in Laws, Sungkyunkwan University

ExECuTIvE vICE PRESIdENT
Choi, Seung Nam

Financial Market Business Unit
Seo, Man Ho
Credit Support Unit
Kim, Byung Hyo

Global Business Unit
Kang, Won
Consumer Banking Business Unit
Kim, Jang Hag

Small & Medium Corporate Banking Business Unit
Kim, Jin Seok

Card Business Unit
Yoo, Jung Keun

Institutional Banking Business Unit
Son, Geun Sun

Compliance Officer
Lee, Kwang Goo

Finance & Management Planning Unit
Jung, Hwa Young

Human Resources Unit
Baeg, Goog Jong

Corporate Banking Business Unit
Lee, Dong Gun

Operation & Support Unit
Kim, Jong Oun

Risk Management Unit
Rhee, Youngtae
Investment Banking Business Unit
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Corporate Governance
Composition of the Board of direCtors

As of the end of March 2012, Woori Banks Board of Directors consists of 11 executive directors: one non-standing director, three standing directors and seven outside directors, appointed to increase the relevant expertise and independence of the Board. The seven outside directors are selected based on their experience in the fields of finance, management, law, accounting and public relations; many are also well-known public figures. They support and monitor the Banks strategic decision-making and overall business affairs.
prior to each full Board meeting, to ensure sufficient discussion and in-depth review of pending issues. Directors from different fields promoted effective bank management and maximized shareholders value by assimilating information from activities both inside& outside the Bank, and then giving onsite oriented advice based on these activities & their expertise knowledge. At each quarterly Board meeting, the quarterly management records were agreed upon, and general discussions took place, as well as discussions on specific matters. The agenda of different meetings included: reporting on the submission of plans for the implementation of the Memorandum of Understanding (MOU) signed with the Financial Supervisory Service (FSS); results and details of the implementation of the MOU with Korea Deposit Insurance Corporation(KDIC); plans to issue foreign currency-denominated bonds; comprehensive briefings on major loans; briefings on NPLs; review of the implementation of the Board of Directors or-
major aCtivities for 2011

The Board held 17 meetings in 2011 to discuss a total of 58 pending issues and 63 briefings, and the overall attendance rate of outside directors was 92%. At the request of the outside directors, an outside director meeting was held one week
ders, and briefings on the results of reviews; and, briefings on the activities of the various committees under the Board of Directors. Of particular note, plans were made to enhance sector-specific expertise and competitiveness within the Group. Specifically, in January 2011, a provisional agreement was reached to launch the Woori Fund Service, a subsidiary which will independently undertake various important functions, including the analysis of fund management performance, verification of fund-based prices, support for development of fund products, and accounting tasks for funds. In addition, in September 2011, it was provisionally agreed to separate the card business that was previously dealt with internally by the Bank. At the December meeting, the Board also confirmed its draft management plan, following in-depth discussions on many issues facing the Bank amid continuing market changes.
TABLE OF CORPORATE gOvERNANCE

Type of Meeting Shareholders Meeting, Board of Directors and Corporate Governance, etc No. of Agenda Issues No. of Briefings Major Issues - Holding regular shareholders meetings, operating the Board of Directors / Board of Directors Management Committee, discussing corporate governance issues, setting and implementing management plans and strategies, launching and realigning divisions - Approving and changing financial statements of settlement, reporting and planning financial records, briefing on results and actions for reviewing the MOU, plans for issuing bonds (including foreign currency bonds), and managing credit limits - Comprehensive briefs on major loans, investing in private equity funds, selling off NPLs, briefing on the status of NPLs, investment companies commitments to invest, dealing with audit and internal control issues, and managing and supporting special contributions of guarantee institutions for SMEs - Performance evaluation / compensation, appointing staff, labor-management relations
24
18
Accounting / Financial Management
10
13
Portfolio & Risk Management / Investment / Audit & Inspection / Govt Regulation
11
19
HR / Organizational Management Others Total
7 6 58
8 5 63
Committees under the Board of direCtors

To suppor t the ef f icient operation of th e B o a rd of D i re c to r s, Wo o r i B a n k has established the Board Governance Commit tee, Board Risk Management Committee, Board Audit Committee, Board Compensation Committee, and Board Audit Committee Member Recommendation Committee.
risk management strategies and policies, risk tolerance levels and transactions or exposures, thereby discern, measure and monitor overall risks in a timely manner.
plans for 2012

In 2012, the Board will make significant contributions to the Banks management by discussing major issues at regular meetings. Already by end-March 2012, the Board of Directors had met five times, with agendas including the approval of financial statements as of year-end 2011 and approval of the Chairman of the Board of Directors. Board meetings will continue on issues such as analysis of management performance and the 2013 management plan. Meetings will also be held on an ad-hoc basis whenever needed, dealing with issues such as management goals, organization and financing. I n 2012, Wo o r i B a n k w i l l s e r ve a s a reliable par tner bank that excels and grows through transparent and efficient management innovation.
Board Audit Committee

The Committee establishes and executes internal audit plans, implement outcome evaluations, and implement ex-post audit measures to improve adequate internal control system and effectively evaluate management performance measures.
Board Governance Committee

The Committee actively suppor ts the Board of Directors by studying/reviewing the overall function & operation of the Board and also by deciding/examining management schemes regarding handover & training issues. The Committee also acts as the Outside Director Candidate Recommendation Committee, pursuant to Article 22-3 of the Bank Act.
Board Compensation Committee

The Committee is independent from the Banks management, and is in charge of establishing compensation policies, and monitoring the design and operation of the Banks performance-based compensation systems.
Board Risk Management Committee

The Committee meets at least quarterly and on an ad hoc basis to deliberate on
Board Audit Committee Member Recommendation Committee

The Committee recommends candidates for the Audit Committee.
developing
confidence
how can risk management boost the quality of financial services?
30
Good risk management means having confidence in our systems and our people. It enables us to take responsibility for our business actions, find new areas of market strength, and apply these to our work. When bankers are secure in what they have, quality and excellent performance is the logical consequence.
31 _ 2011 ANNUAL REPORT
EMPLoyEE _Park, Jang Keun * Job TiTLE _Deputy General Manager, Risk Management Dept * AgE_45
wOORi bANk
risk management
Risks Management is the key to maintaining Profits: Woori Bank minimizes losses by identifying risk quickly and accurately through best-practice risk management programs, building a bank that is robust and reliable.
risk management organization

Woori Banks risk management consists of three independent bodies, each providing unique insights and checks on the Banks risk environment.
2011 review Credit risk management

In 2011, Woori Bank operated, managed and verified new evaluation models (corporate and retail) approved under the new BIS Internal Ratings Act, obtaining timely and relevant reviews of their distinctiveness, predictability and stability. Using these models, bankruptcy rates for each corporate rating and retail pool were estimated and verified by the Bank depending on the time elapsed from approval. The Bank ensures on a yearly basis that it maintains distinctive models for separate corporate/ retail evaluation, and always double-checks their stability and effectiveness in operation.
1. The top decision maker is the Board

Risk Management Commit tee, which meets at least quarterly to deliberate on risk management strategies & policies, and to set acceptable risk levels & limits.
2. The Executive Risk Management Committee holds monthly meetings to review and revise business plans and departmentlevel strategies, to ensure continuous adjustments in response to corporate risk management strategies and policies. The Executive Committee also reviews, adjusts and controls matters in relation to fund management, as well as risk-specific management measures.
3. The Risk Management Unit is an independent organization which consists of the

Risk Management Department, in charge of the overall existing risk management issues, and the Loan Review Department, which takes responsibility for the day-today oversight of Woori Banks risk management operations.
dEVELOPiNG cONfidENcE
market risk management

Woori Bank uses the Standard Approach and the Internal Model to calculate capital adequacy with respect to modeled market risk events. The Standard Approach applies to specific risks provided under Financial Supervisory Service (FSS) guidelines, while the Internal Model quantifies general market risks at the 99% confidence level using variance-covariance (delta-gamma) techniques assuming a 10-day holding period. Potential losses under extreme situations(such as IMF) are measured using stress tests to prepare for any critical events that might surface, and Internal Model is validated by comparing Profit & Loss vs VaR using a daily basis back testing method.
operational risk management

For the second time, we successfully completed the FSS approval and review process for our application regarding approval of the High-level Internal Ratings-based approach, and acquired final approval in June 2009. Since then, we have applied it to our BIS ratio calculation, while also continuing to improve management systems, control structures and measurement systems for the maintenance and upgrading of risk management. To this end, we apply the ORM Index in the Bank-wide performance management index. We conduct OR coaching for units struggling to meet the ORM Index, to help them to reduce OR. In response to changes in financial statements and the adoption of IFRS, we have opened a new account and encouraged improvement of OR measurement systems.
plans for 2012 Credit risk management

In 2012, systems upgrades for credit risks will unfold in multiple directions. The Bank will use the early warning systems from the scoring method developed in 2010, and expand its usage so that it can be used in credit approvals.
Corporate credit rating model(MEs/ SEs) and retail(household, SOHO, credit cards) credit scoring model developed based on the 2005 ~ 2007 data. These models however will be enhanced within the first half of 2012 by utilizing recent data after 2008. interest and liquidity risk management
We plan to complete the Phase 1 IT system within June 2012 to calculate the Banks liquidity management ratios (LCR and NSFR) in accordance with Basel III requirements. We will also regularly review the interest rate and liquidity risk management models by computerizing the back-test to verify the interest VaR and EaR, as well as customer behavior models.
operational risk management

We plan to implement the KRI, a key risk indicator whereby OR can be monitored in real time (currently done monthly), to enhance the timeliness of ORM and support risk management on business sites. Requirements for checking OR can be done prior to the close of business and can be reviewed on the same day. Notices from the real time indicator can be sent via SMS to the general manager of the branch, who can then check the appropriateness of transactions made on that day and alert the staff if necessary, thus helping to lower OR.
wOORi bANk
happier Customers
Our top priority is the principle of Customers First(customer satisfaction). Woori Bank will enable our customers to conveniently and efficiently access all our services in Korea and beyond. We will do this by prioritizing them in everything we do.
Woori Bank wants to be the No.1 Bank in Korea, and a vital part of this is creating the very best in customer satisfaction. We therefore undertake Bank-wide customer satisfaction management based on medium and long-term strategies that fully reflect customer needs, customer satisfaction analysis inside and outside the Bank, and feedback from all our staff on a top down or bottom up basis. The Banks customer satisfaction unit consists of an inverted pyramid oriented towards customers and staff on site, instead of the usual corporate profit-oriented pyramid. Our top priority is our customers, and everyone at Woori Bank is aligned in the same direction. CEO Lee, Soon Woo, who took the helm in March 2011, unveiled a corporate slogan The Bank for Customer Convenience along with a series of management measures focused on customer first and siteoriented management. We execute our customer satisfaction program based on specific strategies under the new slogan, always aiming to be no. 1 in customer happiness. These include a monthly phone survey of customers who visited a branch the previous day, to evaluate the service they had received. We also reflect the voice of the customer as submitted through various channels to the customer satisfaction KPI.
review of 2011 and plans for 2012 differentiated Cs programs

In 2011, Woori Bank held a differentiated training session called Personal Image Making(PIM) of the staff and thereby raised awareness about the customer first mindset. This contributed to stronger customer loyalty and improved business capabilities. Moreover, the Bank shared customer feedback via video training on Woori Action, and proposed active measures to improve customer satisfaction.
A training session called Two-Day OneNight Harmony was launched, and received positive feedback from our staff. It has been particularly effective at improving internal communication and raising awareness about the importance of a positive attitude. In May 2011, 823 customer satisfaction leaders participated in the 2011 Customer Satisfaction Leader Hanmaeum Festival to boost morale and strengthen customer satisfaction leadership. We published the Service Webzine in 2011 to enhance Customer First service, and to raise our competitiveness by sharing information. Heads of branches and other staff greeted customers at all our branches, thus improving our image with customers and contributing to a happy culture for staff.
We also undertook a Service Focus, selecting issues and themes every quarter related to major services, reflecting them in our service, and ensuring that customers really were able to feel the change. We have also conducted surveys to raise customer satisfaction, and set up a Customer Satisfaction Portal System and a Cyber Warning System. The Customer Satisfaction Portal System is to prevent customer complaints and raise standards of customer satisfaction, based on data from branches, and to use Woori Banks exclusive customer satisfaction and integrated voice of the customer system to strengthen marketing functions. The Cyber Warning System monitors customer feedback in real time, and thus improves service, prevents customer complaints and improves products and systems.
Creating a work Culture for Customer happiness

Our philosophy is that a bank where all the staf f are happy makes customers happy as well, and so we strive to facilitate a happy work culture. In particular, we garnered great feedback from our staff on the congratulatory letters sent from the Banks CEO to the staff who excel in customer satisfaction, and on the program for Finding Partners in Customer Satisfaction boosting morale and therefore, in turn, boosting customer happiness. The number of branches excelling in customer satisfaction increased, which has further encouraged our staff to strive in improving customer satisfaction. The Staff Satisfaction Center organized various programs, such as Happy Monday, Reach out for Luck, weekend trips, and a one day meditation experience. In 2012, we plan to upgrade all customer-related activities, including the branch environment, and continue to initiate projects that befit us as a bank that has been inducted into the Customer Service Hall of Fame.
awards
- Top in Customer Satisfaction Management Award, inducted into the Customer Service Hall of Fame and Best CEO Award (Korea Management Association Consulting(KMAC)) - Grand Prize of Customer Delight Award (Korea Economic Daily), Four Straight Years - 1st in Korean Standard Service Quality Index(KS-SQI) Banking Sector for Customer Satisfaction (Korean Standards Association)
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ethical management
All staff at Woori Bank takes part in ethical management programs, and make sure that ethical management takes root in its daily practices, so that customers, shareholders and the community can rely on us completely. Our bank remains an exemplary ethical company.
Changes in the financial environment such as the recent global financial crisis, and expansion of the Banks business operations, increase various forms of market and legal risks. Woori Bank aims to grant sustainable growth to the national economy and social development by ethically managing and fulfilling our social responsibilities towards all stakeholders such as customers, shareholders, staff, the nation and society. To this end, we established Woori Banks Code of Ethics to serve as principles by which all staff must abide. We also set in place Wooris Promises and Job-specific Guidelines, to train staff, to comply with our guidelines, and to increase customer happiness.
review of 2011 praCtiCing woori Banks Code of ethiCs

Woori Bank put into place various practices and a system to ensure our Code of Ethics is implemented.
operating the Clean Center:

The Clean Center facilitates reporting or whistleblowing on ethical matters as well as consulting on ethical management. Vitally, it protects whistleblowers, to encourage ethical management.
operating a reporting system for gift & entertainment exchange:

If money or gifts and entertainment are offered by business customers, clients or other staff, and if for special occasions exceeds KRW 50,000, they must be reported to the Legal Support Division. So far, approximately 34 cases have been reported and KRW 18 million has been returned.
operating the fit & proper employee evaluation system:

The Ethical Management Support Council meeting was held every month in 2011, and the Council honored 1,778 excellent cases of ethical management.
We check that all product-specific principle-based guidelines is followed, and post monthly results on Woori Banks Intranet. In addition, we provide training material on ethical management, such as our monthly Ethical Compliance Practices manual, containing important reminders and practical cases on ethical management, as well as posting 100 Questions and Answers on Ethical Management for training through case studies. We also took part in the 32nd CEO Forum on Ethical Management and the 14th Ethical Management Committee of the Korea Chamber of Commerce and Industry.
provide practical legal advice:

We will strengthen problem-solving skills on legal matters for staff, and ensure that principle-based business can become embedded through legal support. We will therefore highlight and explain recent financial litigation, publish columns written by attorneys and publish the Woori Legal Report.
public sale of Congratulatory gifts:

In Korea, it is traditional to offer celebration wreth/flowerpot to congratulate newlyappointed executives. Woori Bank now sells these gifts on behalf of social welfare organizations, and, in 2011, we sold 658 gifts and donated revenues of KRW 16 million.
provide intensive training on ethical management:

We will continue to distribute Ethical Compliance Practices and 100 Questions and Answers on Ethical Management to all staff.
open legal serviCes and prinCiple-Based monitoring

Woori Bank offers open legal services whereby in-house lawyers resolve staff complaints on legal matters through direct legal consulting, assisting in an investigation, and consulting on litigation, covering a whole range of civil, criminal and household matters. In 2011, we intensified our checks of business units legal monitoring. Each business unit now completes a standardized checklist for self-evaluation on whether prior reviews were completed regarding major legal issues that might surface when handling new products, whether legal monitoring was implemented regularly for staff, and whether prior reviews were completed on documents submitted to outside institutions. Each unit submitted its results so that all legal risks could be minimized.
plans for 2012

In 2012, Woori Bank will continue to aim in being the best and most transparent bank in Korea.
strengthen reviews of legal compliance at business units:

We will strengthen the prior legal reviews of the business operations initiated by each business unit, and, where weaknesses are identified, we will conduct theme based monitoring to preemptively prevent legal risks from surfacing throughout the Bank.
119 (the korean version of 911) site-oriented legal services:

We will provide legal assistance from inhouse lawyers to any staff requiring legal help for work or for personal reasons. Moreover, we plan to extend these services through legal meetings at business units and lectures conducted by in-house lawyers.
strengthen training in ethical management:

We will encourage staff to practice autonomous ethical management through practical training such as the 100 Questions and Answers on Ethical Management, and the Ethical Compliance Practices manual. We will also encourage staff to practice ethical management in their daily business operations through in-depth training for all specialists, including private banker, auditing officers and compliance officers.
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global Business
Woori Bank is located in 15 countries as of December 2011, with an 56 overseas network consisting of 12 branches, 5 local subsidiaries (40 branches belonging to subsidiaries), and 4 representative offices. We plan to expand local subsidiaries and branches, especially in emerging regions with high growth potentials, so that we can become a truly global and competitive bank.
2011 review
Despite a challenging business environment in 2011, Woori Banks overseas operations now have total assets of USD 11.3 billion, loans of USD 5.2billion and operating revenue for the year of USD 310 million. This can be attributed to diversifying our funding sources, and reducing the level of low-profit assets. Our delinquency rate stood at 1.29% as of 2011. Some of our achievements were as follows.
We also plan to add 14 more independent network worldwide, centering around existing branches: four of the Dhaka sub branch and one service center in Bangladesh, two branches and four sub branches of our Chinese subsidiary, and three sub branches in Indonesia.
Building relationships with overseas financial institutions

2011 was a year when liquidity risk management triggered by the European financial crisis topped the agenda. Woori Bank therefore expanded its number of foreign currency borrowers through active marketing and building relationships with overseas financial institutions, and also receiving sufficient foreign currency funds that contributed to effective liquidity management. Building relationships with overseas financial institutions is critical as we have considerably increased the frequency and scale of foreign currency and international financial transactions such as foreign exchange, trade finance and treasury. Woori Bank now has a Financial
strengthening the overseas network

Woori Bank launched three offices in 2011: in In August, we opened St. Petersburg branch in Russia, followed by a sub branch in ZhangJiaGang, China and the KrakatauPOSCO office in Indonesia. Our operations in Chennai, India and So Paolo, Brazil became a branch and a subsidiary respectively to serve those new markets for us, and we plan to open a branch in Sydney,
38
worldwide Branch network

(56 Networks in 15 Nations)
Australia.
Zao woori Bank russia

London LA
woori america Bank
New York Dubai Bahrain
woori Bank China

New Delhi Dhaka Hanoi
Gaeseong
Shanghai
woori global markets Seoul asia ltd Tokyo hk
Hong Kong Ho Chi Minh Kuala Lumpur
Singapore
p.t Bank woori indonesia

Sao Paulo Head Office Overseas Branch (12) Overseas Representative Office (4) Overseas Subsidiary (5)
* Number of Branches under Overseas Subsidiary: Woori Bank America(18), Woori Bank China(14), P.T Bank Woori Indonesia(5), Zao Woori Bank Russia(2) and Woori Global Markets Asia Ltd HK(1) ** The first local bank to establish overseas corporation in China (November 2007), and Russia (January 2008)
Institution(FI) Relationship Manager in every region who is in charge of marketing and creating new business opportunities. We have expanded our business through alliances and deepening ties with numerous financial institutions; in particular, business alliances with major banks in the U.S.A. which enabled us to expand our Letter of Credit business in 2011. In April 2011, Woori Bank was designated as the Leading Counterparty Bank 2011 for Korea by The Asian Banker, a renowned international banking publication, reaffirming our success in Foreign Exchange area. It is especially notable in terms of Forex that Woori Bank offers differentiated services. First, as for joint purchase for money exchange, we offer cyber money exchange marketplace where application for money exchange is possible over the Internet. So, once a designated amount of money or a designated number of people are gathered, phasedout preferential treatment for forex rate is offered to the customers. Second, it is a web EDI(electronic document interchange) service that trading companies can utilize(corporate Internet banking service) in regards to export/ import-related banking services without having to visit the Bank.
Meanwhile, Woori Bank developed an exclusive foreign currency fund settlement system titled Woori Bank Clearing System(WCS). This system allow international offbound settlement services of foreign currencies especially in Korean Won and Chinese Yuan, and furthermore provide services to transfer money directly to overseas through business alliances with many global banks worldwide. As a result, we cover foreign exchange fund, settlement and payment services promptly and efficiently for corporate and retail customers, offering differentiated services befitting the prestige of Woori Bank.
plans for 2012

We will expand our overseas network, particularly through our subsidiaries in India and Australia. We will then have an overseas branch network on every continent except Africa, reaffirming our ability to aspire and become a truely global bank.
awards
- The Leading Counterparty Bank, 2011 for Korea in Foreign Exchange (The Asian Banker)
developing new products

New product development has strengthened our overseas branches. In Tokyo, we launched the Korean Won Time Deposit enabling payment/settlement in Korean Won that is funded by Japanese Yen, as well as introducing International Cash Service. In 2012, we will focus on strengthening product marketing, expanding our portfolio of new products and building the interest and noninterest profit base. We are currently developing a system to offer online internet based wire transfer services at home and abroad.
EMPLoyEE _Song, Kyo Young * Job TiTLE _Assistant Manager, Gil-dong Station Branch * AgE_24
40
experiencing
confidence
what impact does managing on-site have on the quality of banking services?
When our customers have trust in us, they dont have to worry about their banking and finances. Our expertise and our dedication to meeting customers at their places of business, help us to ensure consistent quality in delivering our products and services and it gives our customers the happy feeling that they can rely on us.
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Business review
42
43 Retail banking 45 Private banking 46 U-banking / Smart banking 47 SME banking 48 corporate banking 49 credit card 50 investment banking 51 Trading & derivatives 52 Retirement Pensions 53 Product development
EXPERiENciNG cONfidENcE
retail Banking
Woori Bank is aiming to be the no. 1 retail bank in Korea by securing liquidity, improving profitability, raising asset soundness and managing risk. We will make continuous effort to attract retail customers, and thus to establish a stable base for growth.
review of 2011
As the global financial crisis continued, Woori Banks retail banking served as a base for our banking operations. The retail banking division laid the foundations for solid growth by securing liquidity, improving profitability and increasing asset soundness. The division was able to up-sell high-value products to mid-tier customers to maximize operating income, increase low-cost deposits and preemptively manage its risks. Another important factor was increased profits from sales in cooperation with sister companies in the Woori Financial Group. The key achievements in 2011 were the expansion of the retail base account and increases in high-yield customers. By attracting new customers, including those in schools and hospitals, corporate executives, public officials and new staff at large enterprises, the number of high-yield customers rose sharply. As a result of initiating businesses such as payroll transfer, credit cards and automatic transfer of fees, core deposits increased by KRW 1.2 trillion. company Woori Financial in co marketing products or sharing customers database, thereby promoting intra-Group synergy. This helped to diversify the profit base of both companies while distributing risk over a wider asset base. To this end, the Bank jointly developed and soldedly co-marketed products targeting automobile purchasers as well as low-credit borrowers that are ineligible to apply for loans in the banking sector and introduced such products to affiliates of the Group.
extending our reach

As of December 2011, Woori Bank operates 942 branches in Korea to provide complete financial services to approximately 17 million customers. The Banks 7,000 ATMs and cash dispensers extend the companys reach while raising customer satisfaction and delivering any time, anywhere banking convenience. About 60 branches will be opened in 2012, with a focus on getting closer to the customer. Woori Banks efforts to expand its service delivery channels are key components in its strategy of building customer loyalty and increasing customers access to the broadest range of financial services.
942
achieving group synergy

The Bank integrated the Woori Bonus Family Membership preferencial customers services to include the customers of Woori Aviva Life Insurance and Woori Financial. Woori Bank formed a business alliance with its sister
17 million customers
Providing services to approximately 17 million customers by operating 942 branches as of December-end, 2011
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plans for 2012

We aim to increase one million new customers to establish a stable base for growth once the worst of the global financial crisis is over. Specifically, we are targeting 400,000 new customers through the participation of the Korean government and public agencies in the Banks projects: a project in conjunction with the Ministry of Employment and Labor to launch a bank-book that prevents the seizure of unemployment allowances by unauthorized persons; a project with the Ministry of Health and Welfare to help with medical fees to encourage a higher birth rate in a country with a declining population; and a project to launch a bank-book that prevent the seizure of basic personal benefits given to old-age pensioners. Other diverse products will be launched, including deposits, loans, funds and pensions; these will suit everyages from the teens to the sixties, and we hope this will attract 200,000 customers. Moreover, products customised according
44
We also plan to expand operations in funds, bancassurance, money exchange and transfers, to raise non-interest income. Furthermore, we expected to dominate the market in savings for housing subscriptions and loans for subscribers by being re-selected as a treasury bank for the National Housing Fund, currently worth KRW 91 trillion.
key produCts magic 7 installment savings

We launched Magic 7 Installment Savings in July 2011. This offers a higher interest rate than average savings depending on credit card usage, so that customers can build up large funds and we can offer them a higher interest rate. The product is a hybrid of installment savings and credit card services, which is the first of its kind in Korea. Within six months of its launch, the number of accounts reached 271,000 and the contracted amount hit KRW 2.4 trillion. These figures far exceed those of similar products from other banks.
nationwide Branch network

(942 Branches)
to each relion will attract 100,000 customers as well.
woori happiness Bank-book

In April 2011, we launched a bank-book to prevent the seizure of basic social security benefits. This first of a kind product shows the Banks commitment to citizen-friendly banking, especially by exempting the socially vulnerable
Seoul (454) Inchon (39)

Gyeonggi (214) Chungbuk (11) Chungnam (21) Daejeon
Kangwon (9)
from money transfer fees and fees for using ATMs. As a result, Woori Bank received an Award from the Ministry of Health and Welfare in 2011.
(21)
Gyeongbuk (20)
Daegu (25) Ulsan (9)
awards
- Ministers Award as being the best citizen friendly banking (Ministry of Health, and Welfare)
Jeonbuk (10) Gyeongnam (26) Jeonnam (11)
Busan (56)
Gwangju (13)
Jeju (3)
private Banking
With a commitment of providing the highest standards of asset management in private banking, Woori Bank aims to go beyond customer satisfaction, and deliver life care services that is far more than just private banking.
review of 2011
Woori Bank has targeted private banking (PB) as a core growth engine for the medium to long term business expansion. We are building strategies that will enable us to register the highest-ever increase of total assets under management in Korea, and of consulting services for PB customers. Two Chairs is Woori Banks exclusive private banking brand, symbolizing our one-on-one approach to personalized service for high-income individuals. Woori Bank operates 6 private banking centers and 370 PB branches, all of which are staffed and equipped to deliver customize d o n e -sto p f i n a n c i a l s e r v i c e s. We provide asset management consulting services and conduct seminars on real estate for prospective local customers through overseas branches and subsidiaries, thereby providing PB services on a global basis. Our private banking advisory centers, with more than twenty specialists in real estate, tax and overseas investment, are located in every major Korean city. Consulting ser vices on donation/ inheritance, succession at family businesses and taxation are available, along with total services for real estate investment, market outlook, overseas investments and studying abroad. Woori Banks advisory centers are now established as Koreas No.1 financial consulting service providers. The Bank also operates the PB Academy, with the industr ys best curriculum for fostering specialists in comprehensive asset management. The Academy has had 126 graduates over the past four years: 117 from Woori Bank, and 9 from Kwangju Bank and Kyongnam Bank. These specialists are now responsible for delivering top-quality PB ser vices at the branch level throughout the nation. Private Banking at Woori Bank received for two straight years the Korea Luxury Brand Award and the Asia PB Award. Even in the af termath of the financial crisis, and despite challenges such as
low interest rates and plummeting stock prices in 2011, PB is maintaining growth of some 8%.
plans for 2012

In 2012, we plan to offer upgraded special services and comprehensive asset management services for PB customers. This will include services for our individual customers of preference, their families and even their companies. To this end, we will provide a comprehensive asset management platform, spearheaded by the Wealth Management (WM) team. We will expand the number of PB centers to improve our sales capabilities for High Net Worth (HNW) customers, and expand our consulting model, offering genuinely customized comprehensive asset management services. We will also ex tend customer ser vice beyond expectations. We plan to add a concierge service to the Two Chairs service, providing life care services including medical check-ups, hotel reservations, sports and arts performance ti c ke ts, g o l f l e s s o n s a n d h o m e c a re services. Moreover, the PB Academy will be upgraded and expanded to secure the Banks competitive edge. Training courses covering wealth management, inter-personal skills, consulting skills and an understanding of our HNW customers lifestyles will be separated, so that all courses are customized and specialized according to different needs. PB services beyond wealth management is the essence of Woori Banks Private Banking. In 2012, we will continue to upgrade our PB services, with a constant focus on the customer.
awards
- Korea Luxury Brand Award (The Korea Economic Daily), two straight Years - Asia PB Award (The Asia Economy Daily), two straight Years
Approximately
2008 financial crisis
8%
Yearly average growth rate in private banking after the
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u-Banking
(Ubiquitous Banking)
review of 2011
Woori Bank has maintained its dominant position in Cash Management Services (CMS); as at the end of 2011, the number of CMS customers had reached 57,000. We also have had the No.1 market share in online products for many years, thanks to continuous product innovation. In 2011, our sales of online product reached KRW 5.6 trillion, a market share of 43.6%.
key produCts smart Banking In May 2011, we increased the capabilities of Woori Smart Banking, a banking service via smart devices, by launching three apps: One Touch for Retail Customers, One Touch for Corporate Customers and One Touch World. The service was selected as Koreas best banking app service see below thanks to its innovation. Woori Bank now provides many smart phone-based services, including not only account inquiries, money transfers and product subscriptions, but also services as diverse as indicating of the number of customers waiting for service and real estate inquiries. woori erp We help companies handle asset management and account management at the same time through a financial Enterprise Resource Planning (ERP) product that combines the functions of CMS and ERP. awards
- The No.1 App in Korea based on Korea Smart App Index (Sookmyung Womens Universitys Web Development Research Institute and the Electronic Times) - The Grand Prize of the 6th Korea Internet Security Agency Award (Korea Internet Security Agency) - The Grand Prize in the banking sector of the 4th Korea Internet Communication Satisfaction Award(Korea Internet Communication Association) - The Top Winners Prize for open banking of the 11th Korea e-banking Service Award(The Korea Economic Daily)
smart Banking
As U-banking comes more and more into the spotlight, thanks to advancements in IT, Woori Bank will continue to offer state-of-the-art U-banking services, and will make its services even better for customers throughout 2012. We will be a smarter bank, catering to the changing needs of our customers.
establishing a leading Banking portal

We enhanced customer convenience by upgrading the Banks website in March 2011. We expanded channels for open banking services, and also the channels through which customers can access Internet banking, regardless of PC operating system or web browser.
Bolstering Competitiveness in e-banking
43.6%
kRw 5.6 trillion
We up grad e d th e Ca s h M a nag e m e nt Ser vice(CMS) and expanded the lineup of e-banking products to attract new corporate customers. In regards to SMEs, we completed the set-up of our nex tgeneration banking systems, to offer stable banking services. For example, Woori ERP provides SME specific account interlinking a management service that is expected to better increase prime SME users to our bank.
Online product records of KRW 5.6 trillion and MS of 43.6% as of 2011-end, ranking first in market share in online product sales for many years
plans for 2012

I n 2012, o u r U - b a n k i n g d i v i s i o n w i l l strengthen its competitiveness in Internet banking, smart banking, corporate banking and WIN-CMS(Woori Internet Cash Management Service), to lead the smart banking market and secure high-yield customers through digital banking.
sme Banking
Despite difficulties at home and abroad, Woori Bank achieved an outstanding performance in the SME banking sector. We did this by using a workforce that specializes in SME banking, and by attracting higher numbers of SME customers with an SME-friendly product line-up. We will always offer new services and products to our SMEs, in the belief that they are the backbone of the Korean economy.
review of 2011
Woori Banks Small & Medium Corporate Banking Business Unit expands Woori Banks portfolio of SME loans by creating an SME-friendly product line-up that reflects our SME customers diverse characteristics and needs. Despite difficulties at home and abroad, the Small & Medium Corporate Banking Business Unit increased operating revenue by KRW 58.1 billion, to KRW 1,808.2 billion in 2011 compared to KRW 1,750.1 billion in 2010, thanks to an increase in customer numbers of 49,000, and an increase in highyield customers rated BBB- and above of 16,000 year on year. We enjoyed a successful year in liquidity management, with an increase of KRW 5.5 trillion in the average balance of total deposits. In our loan segment, three loan products recorded sales volume of KRW 1,217.2 billion, with total SME loans reaching approximately KRW 58 trillion by the end of 2011. Of particular note, the Woori Big Chance Loan, targeting high-yield customers with ratings of BBB- and above, recorded a sales volume of approximately KRW 1 trillion. We also offered 125 cases of consulting services, and their upgraded quality truly satisfied our customers. These site-oriented customized consulting services for SME customers were the first to be offered in the Korean banking sector since 2001.
plans for 2012

The Small & Medium Corporate Banking Business Unit will build on its existing markets, and explore new markets by focusing on SME clusters, specifically the SOHO customer market, and by conducting specialized customizable marketing. We also plan to launch a loan product particularly aimed at SMEs in industrial complexes, and also a customized loan product that is to serve franchise entrepreneurs. We will strive to strengthen relationships with existing customers, and increase the volume of banking transactions by increasing the loans for settlement, facilitating e-banking services and upgrading preferential services for high-yield customers. We will continue special management of potential NPLs, and the improvement of our asset portfolios. Lastly, we will expand corporate consulting by offering new consulting services like green consulting, targeting companies involved in environmental oriented green industries.
key produCts woori Big Chance loan

Woori Big Chance Loan, launched in 2011, is a product with a significantly lower interest rate, and targets corporate clients with good credit ratings. There are also additional benefits in terms of interest rates and various discounted fees for our SME customers miscellaneous transactions.
awards
- Silver Tower Order of Industrial Service Merit of the 16th Best SME Banking Award (Small and Medium Business Administration)
49,000 16,000
We now seek to prioritize customer satisfaction, driven by our specialist workforce. Woori Banks outstanding achievements in the SME banking market have been attributable to the excellence of our SME Relationship Managers (RM); we have specialized 849 SME RMs, and to-be specialized 662 SME RMs in training.
customers customers
Increases of 49,000 SME customers and increases of 16,000 high-yield customers of BBB- and above, year on year
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Corporate Banking
Woori Bank continues to support its corporate clients, encouraging partnership with large enterprises and SMEs on providing differentiated loan products, and developing alongside Corporate customers. We will continue to do our best to make sure that we fulfill our active role as a true partner for Corporates and others.
review of 2011
The Corporate Banking Division has a vision of becoming the No.1 banker in Korean industry, and becoming a leading bank in Asia over the medium to long-term. To this end, the division has expanded its one-stop services in cooperation with sister companies. Relationships with the largest corporate customers are strengthened through the Woori Diamond Club, a meeting of the heads of the countrys largest multinationals. New product development continued apace, with the launch of customized products that cater to customer needs and changing markets. According to information compiled by the FSS in 2011, Woori Bank was designated as the main creditor bank for 15 of Koreas 37 largest corporate groups, more than any other bank, including world-leading companies such as Samsung, LG and POSCO. Quantitative indicators were also strong. Total assets amounted to KRW 29.3 trillion, along with operating revenue of KRW 1 trillion, net income of KRW 607.5 billion and export/import volume of USD 218.8 billion. The net interest margin was 2.09%. Moreover, we contributed to the national economy through support for partner SMEs, while also facilitating cooperation between large enterprises and SMEs, and strengthening the Banks roles in Corporate Banking. Strong performance was achieved in the sales of the Partnership Loan for Large Enterprises, the Partnership Guarantee Loan for Large Enterprises, and the Settlement Fund Loan for Partner Companies.
plans for 2012

In 2012, we plan to attract high-yield assets and customers, maximize synergy by offering multiple Woori Group products to high-yield partner companies, and facilitate the transactions of corporate executives. We will implement customer-oriented site management, helped by our outstanding business capabilities and our strong relationships within Corporate Banking.
key produCts B2B loan / B2B plus loan

These are corporate loan products that can be provided in installment loans with accounts receivable being used as collateral without the need for additional collateral or the guarantee of a partner company. This is designed to facilitate companies e-settlements.
kRw trillion kRw 1 trillion

Total assets and operating income in 2011 in corporate banking
29.3
partnership loan for large enterprises / partnership guarantee loan for large enterprises / settlement fund loan for partner Companies
These are corporate loan products offered at a low interest rate under a business agreement between the Bank and a large company, to encourage cooperation between large enterprises and SMEs.
15
Main creditor bank for 15 of Koreas 37 largest corporate groups, including world-leading companies such as Samsung, LG and POSCO
woori Corporate factoring

This is a corporate loan product whereby the Bank purchases sellers accounts receivable on a no recourse basis. This is in response to changing market requirements following the mandatory adoption of the IFRS, and this creates a new source of relatively low-risk, high-reward profits.
Credit Card
Woori Bank has a comprehensive credit card business, thus broadening the customer base and increasing profitability. We will continue to offer differentiated customer management and marketing.
review of 2011
Since Woori Card was merged into Woori Bank to form the Credit Card Division in 2007, it has succeeded in building asset soundness thanks to conservative and stable business operations, especially in the aftermath of the global financial crisis and the subsequent market slowdown. In 2011, the Bank focused on maintaining asset soundness and improving business operations, while actively taking part in the public bid market and seeking to attract more customers. We rationalized the card review standard and optimized the limits. We also broadened the customer base by expanding the market for check cards. Synergies were created with increases in deposits and card sales through MAGIC 7 Installment
1)
plans for 2012

In 2012, we will focus on increasing the number of high-yield customers, expanding our participation in the public bid market and establishing the infrastructure for mobile cards. New systems will be out in place to offer a smart business environment within branches. We will also focus on enhancing our competitiveness by maximizing the operating efficiency of each division, enhancing profit & loss management, and strengthening the analytical skills for membership data. We will do our best to raise membership and sales volumes through strong customer management and marketing. We will also strive to increase high-yield assets through the retention of high-yield customers, the optimization of risk management, the development of financial hybrid products with more robust financial functions, the exploration of customizeable markets, the enhancement of our brand image, and the utilization of a new card system.
1)
The market for card settlement systems or the set-up of settlement infrastructure for public projects commissioned or conducted by public agencies.
Savings, a product that offers additional interest for increases in card usage. We launched the Woori Children-Love Card as the operator of the governments nursery subsidy program, and also launched the Woori V Check Green Card providing economic benefits for green living and consumption. Another new product was Woori V Card Oil-100, which offered oil price discounts.
key produCts discount product new woori v Card

This is a new version of the Woori V Card launched in May 2007 as a standard discount card, encompassing benefits at gas stations, shopping malls, restaurants, movie theaters and provide other financial benefits.
kRw 39.4 trillion, UP
Services to enable automatic transfers for telecommunication and transportation fees led to higher customer retention rates. We also classified the criteria for our VIP program (V Club) and provided services accordingly, focusing on attracting and retaining high-yield customers. We also focused on active responses to market changes and the need for customer convenience by providing credit card inquiry and transaction services through smart phones. As of December 31st, 2011, Woori Cards market share was sixth in the country. The annual sales volume was KRW 39.4 trillion, up 10.0% year-on-year, while the number of credit cardholders (including check cardholders) increased 6.5%, to 11.7 million.
10%
point product woori v point Card

0.2% of the total spent on this card is accumulated, which is accumulated additionally to the amount used for Internet shopping and in gas stations depending on customers taste.
Woori Banks 2011 annual sales reached KRW 39.4 trillion and the year-on-year growth rate
11.7 million customers, UP
6.5%
government nursery subsidy Card woori Children-love Card

This card provides discounts for nursery fees, shopping, transportation, culture and educational content, in conjunction with the governments nursery subsidies.
No. of Woori Banks credit card (including check card) customers and the year-on-year growth rate
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investment Banking
Woori Bank succeeded in Investment Banking (IB) by selectively initiating business while considering overall profitability, raising asset soundness and improving the profitability of assets currently held. We will continuously expand IB services for corporate clients, to become Koreas leading operator of the Commercial & Investment Banking (CIB) model.
review of 2011
The credit crunch, stemming from the ongoing global financial crisis, worsened again in 2011 due to the European financial crisis. However we have sold and written off nonperforming assets in construction and shipbuilding, and have instead focused on high end customers for providing term loans and
financial environment is not likely. There will therefore be more disposal of assets under corporate restructuring to liquidate noncore businesses, increased corporate M&A financing, and an overall focus on new businesses to diversify our corporate business operations for medium to long-term growth. A positive sign is that there will be more demand in social overhead capital(SOC) as the government makes increasing attempts to build social infrastructure facilities. Nonetheless, the outlook for real estate development projects including publicly-placed large real estate PF is yet to recover. In 2012, Woori Bank will expand IB-related financing for corporate clients. We will continue financial arrangements for traditional SOC projects such as BTO and BTL by marketing on corporate clients and strengthening our networks. We will also increase fee income by arranging and participating in M&A financing. We also plan to secure new income sources in the medium to long-term by tapping into power generation and renewable energy markets. The IB Division will position itself as Koreas leading investment bank through the strategic alignment of the two businesses, corporate banking and investment banking.
kRw
13.3
trillion
M&A financing. We also built asset soundness by disposing of low-yield assets and assets at risk of default. We improved the profitability of assets by increasing the volume of Won denominated loans, especially for commercially viable projects. The IB Division holds assets worth KRW 13.3 trillion as of end-2011(including offbalance sheet items), consisting of loans of KRW 6.1 trillion, securities of KRW 2.0 trillion and off-balance sheet items of KRW 4.9 trillion. Recently, invested high yield loans and securities have been recovered which enabled us to receive sizeable amount of dividend and profit on sale.
Total assets as of 2011-end held by the IB head office of Woori Bank
plans for 2012

The domestic IB market in 2012 is expected to suffer from the ongoing European financial crisis, slowing Chinese economic growth, and export reductions, so on the whole, improvement in the economic and
trading & derivatives

Our bank became the first Korean bank to issue subordinated bonds in foreign currencies and demonstrated investors confidence despite European crisis and uncertain market conditions. We will continue to pursue sustainable growth in trading & derivatives by broadening the customer base while diversifying our product range.
review of 2011
Woori Bank maintains a dominant market share in trading & derivatives in all fields related to the financial markets, such as foreign exchange dealing, derivatives, investment in securities and short-term financing. We are particularly competitive in derivatives transactions like forwards, swaps and options based on diverse underlying assets (interest rates, foreign exchange, equities and commodities) and maintain a solid presence as a market maker. The Financial Market Business Unit increased financing through foreign currency derivatives such as Samurai Bond to take preemptive measures against spillover effect from the Euro zone crisis. We became the first Korean bank to issue subordinated bonds in foreign currencies and gain investors confidence in its strong capital soundness and credit ratings. We responded actively to the drop of U.S.A. credit ratings by securing liquidity in foreign currencies. We were thus able to meet the FSSs prescribed liquidity ratio and mid to long-term financing ratio for foreign currencies. We also built on our dominance in the derivatives market by strengthening derivatives trading based on predictions of market variables in policies, and supply and demand forecasts. Woori Bank has developed a fully diversified portfolio of foreign currency derivatives, including the Mexican Peso, South African Rand, Polish Zloty, Russian Ruble and Chinese Yuan. One important breakthrough was the development of products offering 24-hour hedging of commodity price risk, now available through the Banks Night Desk for commodity derivatives. We also offer services to cover overnight exchange rate risks by opening our London Desk when Korean foreign exchange desk closes.
plans for 2012

The business goal of the Financial Market Business Unit is to achieve sustainable growth through risk management, and to do so despite the economic uncertainties at home and abroad. To achieve this goal, we will implement the following strategies:
managing liquidity
We will optimize liquidity management by controlling our trading positions and maintaining the loan-to-deposit ratio below 100% of the average monthly balance. We will reduce the concentration of USD in our portfolio by diversifying funding into currencies such as Thai Baht, Malaysian Ringgit and Swiss Francs. Moreover, we plan to take preemptive measures in responding to financial markets and adapt to regulatory changes in various ways: reviewing fund variation factors and setting responses on a daily, weekly and monthly basis, monitoring regulatory changes such as amendments to the Regulation on the Supervision of Banking Business, managing the liquidity ratio and continuously seeking to reduce any fund imbalances.
expanding the Base of high-yield Customers

We plan to broaden our base of high-yield customers by attracting new derivatives customers, increasing the transaction volume with institutional investors and also enhancing transactions with existing high-yield customers. We will more fully utilize internal sales channels such as subsidiaries, overseas branches and other business units that may lead to cross-sales marketing while minimize expected customer defections due to merchant banking licence expiration.
strengthening risk management

We will reduce operational risks by continuously improving our IT systems, and by reducing counterparty credit and payment risks through the liquidation of over-the-counter derivatives. Moreover, all our product structures will take risk into account in developing new product, and in minimizing market risk through preemptive risk management.
wOORi bANk
retirement pensions
Woori Bank is building a strong position in the retirement pensions market through a well-equipped marketing unit, quality products and specialist operations. We are proud to offer customers the best in retirement pensions, which increasingly serve as the cornerstone for post-retirement life.
review of 2011
Retirement pension products are sold using a structure whereby subscribers can accumulate retirement annuities separately from their employer. The same sales mechanisms are used by all retirement pension companies. The Bank launched the Happy Life Bankbook for retirement pension subscribers, a first product of its kind in Korea. The product enables subscribers to conveniently access their retirement annuities as they accumulate their pension, which is the key concern of most subscribers, and they can check their bank-book to see how the funds are managed. The Bank has also established the Retirement Pension Research Institute, in which the Bank coordinates its wide-ranging advisory services on pension asset management, and offers related consulting services. In addition, in compliance with the governments revision of the Workers Retirement Wage Guarantee Act, we upgraded our pension asset management systems. We also offer good customer service, and make sure that all product sales are appropriate, by providing updates and notifications to subscribers through the Banks Happy Call System. In 2011, Woori Banks pension deposits climbed KRW 1.86 trillion, to KRW 4.33 tril-
plans for 2012

The retirement pensions market used to be quite small, due to a lack of awareness among both employers and employees. However, since the adoption of the retirement pension system in December 2005, the market has doubled every year. Woori Bank is striving to secure a stable customer and profit for a long term by taking an early lead in the retirement pensions market. We believe that, because retirement pensions are the foundation for post-retirement life, it is critical for us to staff our team with employees who are true experts in this area. Our goal is to become No.1 in the retirement pension market by building our strengths in corporate banking, creating a well-organized marketing unit, diversifying the product range and making sure all funds are professionally managed.
key produCts Customer-designated maturity time deposit, and woori retirement pension loan
Woori Bank has a portfolio of 29 performance-based dividend products from 13 management companies, including time deposits with various maturity structures, a first-of-a-kind inflation-indexed bond, and an equity-indexed fund. Of particular note, we developed and manage a Customerdesignated Maturity Time Deposit which enables the customer to designate their own maturity, depending on their financial schedule, and the Woori Retirement Pension Loan targeting corporate staff subscribing to a retirement pension. We are developing new pension products for the baby boomer generation who is now nearing retirement.
kRw
4.3
lion. The number of joined companies enjoyed impressive annual growth of 44.3%,
trillion
rising to 17,754. Individual subscribers were attracted in even greater numbers, increasing 57.3% or 243,861, to reach 669,487 at year-end 2011.
Amount of pension deposits as of 2011-end
17,754 UP
44.3%
17,754 companies subscribed to retirement pension as of 2011-end, growth rate of companies subscribed to retirement pension is 44.3% year-on-year
product development
Woori Banks Product Development Division consists of not only product development specialists but also those specialized in research, data analysis, and marketing thereby strengthening the Banks competency in product R&D. Through surveys aligned with outside institutions, the Bank enables the in-house optimal product development for customers independently without outsourcing, based on the customers specific database and consideration of the market condition.
The Division was formed to maximize efficiency and synergies by integrating product development teams that used to be scattered in each business division under the Bank. The division was organized to encourage a competitive product development under one integrated unit. It is the first-of-its-kind unique and creative unit in the Korean banking history, playing a leading role in the banking sector. Moreover, departments on retail products, housing products, corporate products, SME products, Forex products, card products, Internet, smart banking products were integrated into the Division on July 7, 2011. The fund product operation was added in December, which is an asset management product. Accordingly, we strive to develop the best-inclass products in deposits, asset management, loans, Forex and financial services catering to various needs of PB customers, retail customers, large enterprise clients, SME clients, institutional clients and Internet users. Of particular note, products in the Division amounted to 150 as of December-end, 2011, including 39 corporate products (27 for loans and 12 for deposits), 8 housing product, 52 retail products (36 for deposits and 16 for loans), and 46 card products. Most of the products are aligned with mobile devices and the Internet. Fund products such as asset management products amount to 140 in total.
review of 2011
Woori Banks Product Development Division launched on July 7, 2011, and since then introduced 18 retail products, 4 housing products, 1 corporate product and 6 card products, totaling 28 for a short term of six months. Of particular note, the Time Deposit Marking Koreas 66th Year of Independence from Japan achieved the volume of KRW 644.6 billion as of December-end, while WE Dream Loan, a product for SMEs amounted to KRW 701.1 billion. The Bank also launched the iTouch Housing Leasehold Loan to lead the Internet and smart banking markets.
plans for 2012

Woori Banks Product Development Division have its 2012 slogan to develop the market-leading innovative products, promptly, timely and creatively to aim for the new high-yield customers and to provide convenient financial solutions to our customers. The Division will play a leading role in exploring the new market by not only developing the Banks new exclusive products but also will expand its boundaries to derivatives-linked structured deposit & loan products, hybrid products of deposit & loan and card products, other products aligned with new banking services, and ELD-based pension products where index-linked derivative transactions are added.
150
150 products are available as of 2011-end
sustaining
confidence
how can having the best people boost our customers happiness?
54
Having the best human resources means that we have the confidence in our people to allow them to take responsibility for their business actions, discover new business opportunities and apply these to their work with customers. When people are inspired by what they do, quality service follows naturally, and so does customer happiness.
EMPLoyEE _Kim, Byung Jin * Job TiTLE _Assistant Manager, Public Relations Dept * AgE_32
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sustainability review
56
57 creating financial Opportunities (Microcredit) 60 inspiring Our People 62 Sharing Heart
30 Woori bank
SUSTAiNiNG cONfidENcE
Woori Bank offers socially responsible banking services by supporting those who might be struggling financially, the socially vulnerable and people who might not have access to banking services. We also offer microcredit services that have helped a whole new stratum of entrepreneurs who did not previously have access to funding.
Woori Banks Miso-credit is a Korean-style Microcredit that helps those who cannot access institutional financial funds, and also helps companies in starting up a business or managing their funds. Woori Bank led the founding of the Woori Miso Financial Foundation with contributions from affiliates of Woori Financial Group that contributed KRW 10 billion a year for five years. The foundation has established channels in 8 regions nationwide, to support small-scale entrepreneurs in starting up a business or managing their finances. The purpose of the Foundation is to support those with low income and limited credit to be financially self-sufficient, thus enhancing the stability and comfort of their lives. To ensure fairness in its operations, the Foundations outside executive directors consist of a priest from the Council of Catholic Social Welfare, a professor at the Sociology and Welfare Department of Soongsil University, and a director of a social welfare center. The Foundations 8 branches have 27 staff in total, to ensure the best support for those in need.
Creating financial opportunities

(microcredit)
wOORi bANk
RevieW of 2011
In 2011, our goal was to serve as a role model in the microcredit sector, and to increase the number of recipients of microcredit. As a result of reaching out to those in need and developing products which cater to them, we were proud to process 925 cases worth KRW 17.4 billion in 2011, bringing the overall totals to 1,413 cases worth KRW 22.2 billion. In particular, we launched products tailored for single-parent families, along with customized products for small-scale entrepreneurs involved in the delivery business. We visit the people who need our services, to make sure they get the most useful product, in the most effective way. In the delivery business, our new microcredit product aims to resolve a shortage of delivery vehicles and other logistical challenges while giving support through collaboration with the Ministry of Land, Transport and Maritime Affairs, and thereby guarantee a stable business environment for small-scale delivery entrepreneurs. As part of our microcredit services, we operate the Woori Microcredit Volunteer Team. This team not only extends financial support but also gives practical advice to recipients in how to be financially independent. The team is comprised of staff from Woori Bank and Woori Financial, as well as specialists including lawyers, tax attorneys, accountants and management consultants, working alongside ordinary citizens, and college students. Their diverse professional knowledge and consulting services on business start-up, management, marketing, law, taxation and accounting for recipients of our microcredit services enable them be fully self-sufficient. In 2011, we launched a sub-branch within Jungnang-gu Office and Yong-in branch, so that we can expand our microcredit services.
925 cases, KRW17.4 billion
The number of microcredit services extended as of 2011-end amounting to 925 cases, and the amount provided as microcredit is 17.4 billion
plans for 2012

The goal for 2012 is to expand the support that Woori Bank may give to those in need through microcredit. So that microcredit services can be available on-site, we will support merchants in traditional markets through an agreement with a traditional market merchant association, and expand the scope of recipients to include entrepreneurs involved in making keys and traditional rice cakes. We are also opening two more branches to increase access for customers. We will examine and share case studies of business success among our loan recipients, so that other recipients gain confidence in conducting their own business and learn from the best practices.
Key PRoductS Business start-up loan

A loan for those preparing to start a new business.
working Capital loan

A loan for individual entrepreneurs already doing business at an established site.
single parent and multi-cultural family support fund

We will increase the level of funding available for members of society who sometimes struggle to gain access to financing, such as single-parent and multi-cultural families.
wOORi bANk
As a company that cherishes its people, Woori Bank does its utmost to create a great workplace, so that staff can work happily, and customers benefit from that happiness. In 2011, we strived to achieve labor-management harmony, and increased welfare benefits for all. We will continue to focus on our people in 2012.
inspiring our people
60
RevieW of 2011 improving employee welfare Benefits

In 2011, Woori Bank got very positive feedback from staffs by launching and improving diverse programs for staff welfare benefits and internal communication. These programs were as follows:
a family weekend journey : This program, launched in July 2011, mainly focuses on the families of our staff. The purpose of these outdoor programs is to encourage love within families, and to recharge body and
mind. Held on the fourth Saturday every month, participants had wetland experience in July, went grape picking in August, and chestnut picking in September. The program was amongst the Banks top ten news highlights for 2011 as a result of the quality of feedback it got.
encouraging a happy monday : The Happy Monday program aims to create a corporate culture where all staff is eager for Mondays to come. Every Monday, a lucky draw is made and the selected branches will get
plenty of snacks delivered to them. There are also other elements of Happy Monday that put smiles on the faces of staff members, and it seems to have succeeded; the program was a huge success, and over 30,000 staff participated.
heart-to-heart dialogue with new staff : Heart-to-heart dialogue with new staff is a program to take notes of complaints and feedback from new staff. Because the program is only open to new hires, this enables
us to listen closely to what they say. and their words are heard at a more honest and deeper level and, because Woori Bank has branches nationwide, the program visits new staff at their site. These efforts have therefore gained a huge positive feedback.
increasing the number of medical Check-up Centers : The number of medical centers available for
the staff annual check-up increased from 41 to 46. The number of items available for the medical check-up also increased, which greatly enhanced the overall level of satisfaction.
free rental of a wedding hall : The wedding hall at HQ is rented out for free to staff at weekends. It offers
a large hall and luxurious decoration, and has received great feedback from staff especially from brides! The luxurious brides room and pyebaek room(post-wedding ceremony ritual) would make any event very special, even compared to the most luxurious hotel wedding halls. The free rental saves hugely on wedding costs for staff, and imbues a sense of community at the Bank.
harmonious laBor-management
Harmonious labor-management is important in making a good workplace. We forged a strong labor-management consensus by applying the amended Labor-Management Act, such as introducing a time-off system for the executives of the labor union, and a preferential scheme for full-time unionists. We also reached agreements on industry-specific bargaining and industry-specific wage negotiations. As a representative of the Korean banking sector, we fulfilled our role in raising wages by 4.1%, and restoring the salaries of new employees.
Moreover, we have innovatively enhanced labor management issues to a long term base and increased our competiveness. An example is the March 2011, MOU implemating agreement of labor management regarding enhanced treatment of employees. This was measured in a quarterly base, but recently was amended to a yearly base. plans for 2012 In 2012, Woori Bank will continue the open dialogue and promote harmony between labor and management, to create the best possible working environment. Professional seminars on labor-management relations will be held officially so that participants can foster expertise in advance, and prevent unnecessary labor-management disputes. Lastly, we will form a joint labor-management task force team to improve HR and training systems.
wOORi bANk
sharing heart
Woori Bank is a warm-hearted bank that connects with the society furthering its scope of support. The Bank makes social contributions across different sectors social welfare, environmental protection, education, culture, arts and expand its support to rural & fishing villages. We focus on more than one-time events: we hope to serve as a bright light for those in need in every corner of the society through consistent acts of love and kindness, carried out by staff and their families.
Woori Bank has a 113-year history working alongside the nation both in times of joy and sadness. Our social contribution activities are aligned with the Banks goal, to implement Shared Hope and Growing Love. Woori Banks staff in 1,000 branches around the nation engages in volunteering activities that help the needy. For example, we have a One Company, One Village sisterhood program that helps rural & fishing villages. We also support the social contribution programs of non-profit organizations, including the Korean Red Cross, the Good Neighbors and the Childrens Fund.
RevieW of 2011
In 2011, Woori Banks social contribution programs spread our love and helped ease burdens across Korea. In 2012, Woori Bank will be the No.1 bank in the most important category - sharing its heart and taking care of those in need.
woori happiness society program : Our Woori Happiness Society Program sponsors the socially vulnerable in the community. This volunteer program is closely aligned with the community on a regular basis, forging sisterhood relationships with social welfare organizations and local childcare centers near our HQ and branches nationwide. In August 2011, we invited 500 children from small schools for the needy to a summer camp where we held an event with a famous Korean comedian and presented scholarships. In November 2011, we hosted a kimchi-preparing event and gave gifts to multi-cultural families, the elderly living alone, and families that of children living with their grandparents.
volunteering for the disabled : Woori Bank holds annual events annually where the disabled and the ablebodied can meet to play sports and have fun together. On November 7th, 2011, Woori Banks volunteer group, including CEO, took part in a marathon alongside with the visually impaired; staff members formed teams with disabled participants and their success as a team broke down walls and forged social integration. Building on these successes, we will continue to hold the 4th Sports Festival and Marathon for the Disabled in 2012.
volunteering with rural & fishing villages, and protecting Cultural properties : Our One
Company, One Village sponsorship program encourages active exchange and shared growth between urban and rural regions. The program marked its 8th anniversary in April 2012 by supporting a village in Koreas Gyeonggi Province. We offer supports such as volunteering during harvests, markets for direct sales of agricultural products, rural village experiences for staff and customers, village refurbishment and income raising in rural villages. We also forged the One Company One Fishing Village program with Mongsan-ri in South Chungcheong Province, and the One Company One Mountain program with Namsan Mountain in Seoul for environmental preservation and natural protection. As part of our heritage, we have signed a contract to protect Hongyuneung, under our One Company One Cultural Property program. Hongyuneung is a UNESCO-designated World Cultural Heritage site, and one of Koreas most important cultural properties. It is the tomb of Koreas Emperor Gojong, and also of King Sunjong, who paved the way for Daehan Cheonil Bank, the forerunner of Woori Bank, to be established, sponsoring it with imperial funds so that a national bank could take root. We regularly conduct activities to protect Hongyuneung, and include a tribute ceremony as part of new staff training, to enhance their appreciation of company history.
woori art Contest : The Woori Art Contest is Koreas top art contest for artistically-inclined children. It
celebrated its 17th anniversary in 2011, when a total of 45,000 elementary, middle and high school students and kindergartners took part; we also held an art event for children from Southeast Asia, who sometimes lacks opportunities for such events in Korea. We are also active in promoting educational and social programs such as offerings economics classes to children and classes of basic money care for North Korean defectors. The childrens class includes a field trip to Woori Bank Museum and opening a new bank-book, so that the children can enjoy a hands-on money-based experience.
multicultural festivals for foreigners : We took part in and supported various events for foreigners to
raise the Banks image as a global leading bank: 2011 Korea Grand Sale, Easter Festival for Foreign Workers, 2011 Information Fair, Mongolia Naadam Festival and Mr. & Ms. Filipino Culture Thanksgiving Festival. As such, we strived to do the best in social responsibilities as a bank specialized in Forex.
increasing the Culture of donations : Our staff is the driving force for increasing Woori Banks culture of
donation. They voluntarily give part of their monthly wages to the Woori Love Fund and the Woori Children Love Fund. We also offer Woori Love e-Sharing, whereby customers can donate by transferring money via Internet banking, encouraging a culture of small-scale donations. We operate the Woori Love e-Sharing, a point-based donation program that donates some of the points accumulated when using credit cards. We also support Myeonghwiwon, a social welfare corporation.
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financial review
64
65 Managements discussion and Analysis 69 independent Auditors Report
158 Organization 160 Global Networks
FINANCIAL REVIEW
Managements Discussion And Analysis

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
This Management Discussion and Analysis (MD&A) and accompanying financial statements comply with Korean financial reporting standards (K-IFRS, consolidated financial statements). The term the Bank, as used in this MD&A, refers to Woori Bank, unless otherwise indicated.
Summary of Management Performance

2011 was a year of continued challenges, with uncertainties from the European financial crisis, a downgrade in USA credit rating, and concerns about inflation at home. Despite these setbacks, the Banks 2011 operating income was KRW 2,683 billion, up 79.1% year-on-year, with net income of KRW 2,069 billion, up 63.9%. This was attributable to continuous efforts to improve profitability, income diversification, including increased fee and dividend income, improving asset soundness, and increases in interest income.
CHANGE
(Unit: KRW Billion)
2011 2,683 5,726 508 123 107 281 1,017 (1,817) (2,553) (428) (24) 2,659 590 2,069
2010 1,498 5,027 494 119 15 235 979 (2,496) (2,264) (376) 39 1,537 275 1,262
AMOUNT 1,185 699 14 4 92 46 38 679 (289) (52) (63) 1,122 315 807
% 79.1 13.9 2.8 3.4 613.3 19.6 3.9 (27.2) 12.8 13.8 (161.5) 73.0 114.5 63.9
Operating income Net interest income Net fee income Dividend income Gain (loss) on financial assets at FVTPL Gain (loss) on AFS financial assets Impairment on credit loss SG&A Expense Other operating income (expense) Gain (loss) on investment assets of related companies Income before income tax Income tax expense Net income
Profitability
Driven by higher interest income, the Return on Assets for 2011 was 0.59%. The Bank watches this indicator very closely, and was pleased with its upward momentum. The Net Interest Margin also rose, to 2.46%; it has been rising since 2009. The SG&A expense ratio stood at 39.7%, continuing to trend satisfactorily downwards.
(Unit:%)
2011 0.59 7.93 2.46 39.7
2010 0.49 7.98 2.22 40.8
CHANGE (%p) 0.10 (0.05) 0.24 (1.07)
Return on Assets Return on Equity Net Interest Margin SG&A Expense Ratio
WOORI BANK

Interest Income and Expense

The Banks 2011 net interest income was KRW 5,726 billion, up KRW 699 billion or 13.9% over the previous year. This was due to interest income rising by KRW 678 billion, with interest on loans increasing by KRW 561 billion, and a drop in interest expenses of KRW 20 billion, and interest on debentures issued decreasing by KRW 244 billion.
CHANGE
(Unit: KRW Billion)
2011 11,659 47 664 10,247 701 5,934 4,477 344 1,015 98 5,726
2010 10,981 12 611 9,686 672 5,954 4,251 340 1,259 104 5,027
AMOUNT 678 35 53 561 29 (20) 226 4 (244) (6) 699
% 6.2 291.7 8.7 5.8 4.3 (0.3) 5.3 1.2 (19.4) (5.8) 13.9
Interest income Interest on deposits Interest on financial assets Interest on loans Other interest income Interest expense Interest on depository liabilities Interest on borrowings Interest on debentures issued Other interest expense
Net interest income
Gain (loss) on financial assets at FVTPL

The Banks gain on financial assets at FVTPL in 2011 was KRW 107 billion, up KRW 92 billion over the previous year. The loss on the valuation and disposal of securities was KRW 55 billion, while gains on derivatives and other financial assets were KRW 127 billion and KRW 35 billion, respectively.
CHANGE
(Unit: KRW Billion)
2011 (55) 127 35 107
2010 129 (84) (30) 15
AMOUNT (184) 211 65 92
% (142.6) (251.2) (216.7) 613.3
Gain (loss) on securities Gain (loss) on derivatives Gain (loss) on other financial products Total
Gain (loss) on AFS financial assets

Gains on the disposal of securities outran impairment losses, so the Banks gains on AFS financial assets closed at KRW 1,017 billion, up KRW 38 billion year-on-year.
CHANGE
(Unit: KRW Billion)
2011 1,200 (183) 1,017
2010 980 (2) 979
AMOUNT 220 (181) 38
% 22.4 9,050.0 3.9
Gain (loss) on disposal of securities Reversal of impairment loss on securities (impairment loss) Total
FINANCIAL REVIEW
Impairment losses on loans and other credit

The Bank has strived to spearhead a culture which raises accountability for NPLs, and prevents defaults, to improve overall asset soundness. In 2011, impairment losses totaled KRW 1,817 billion, down significantly, by 27.2% year-on-year. This is a result of the increase in impairment losses on payment guarantees of KRW 100 billion being considerably more than balanced by a drop in impairment losses on loans of KRW 779 billion.
CHANGE
(Unit: KRW Billion)
2011 1,711 106 1,817
2010 2,490 6 2,496
AMOUNT (779) 100 (679)
% (31.3) 1,666.7 (27.2)
Impairment losses on loans Impairment losses on payment guarantees and allowances for undrawn commitments Total
SG&A Expenses
The Banks SG&A expenses in 2011 went up 12.8% due to higher expenses across the board, with wages in particular up 21.1%. Although the absolute amount increased, however, the SG&A expense ratio fell, thanks to the Banks cost saving efforts.
CHANGE
(Unit: KRW Billion)
2011 1,190 1,044 146 127 1,236 260 61 187 245 483 2,553
2010 983 870 113 126 1,155 240 62 179 246 428 2,264
AMOUNT 207 174 33 1 81 20 (1) 8 (1) 55 289
% 21.1 20.0 29.2 0.8 7.0 8.3 (1.6) 4.5 (0.4) 12.9 12.8
Salaries Short-term salaries Retirement benefits and termination benefits Depreciation SG&A expenses Welfare benefits Compensation of actual expenses Rent Computer & software Other SG&A expenses Total
Balance Sheet
Total assets at year end were 6.1% higher at KRW 242,472 billion, up KRW 13,917 billion, making Woori Bank the second-largest domestic bank as measured by total assets. Loans and bonds receivable increased by KRW 14,278 billion year-on-year, and most asset items increased over the year, although financial assets dropped by KRW 2,245 billion. Total liabilities amounted to KRW 224,346 billion, up 6.3%, or KRW 13,278 billion. Depository liabilities and borrowings went up by KRW 6,778 billion and KRW 192 billion respectively, but bonds issued dropped by KRW 381 billion. Shareholders equity at year-end was KRW 18,126 billion, up 3.7% year-on-year.
WOORI BANK

CHANGE
(Unit: KRW Billion)
2011 242,472 5,389 41,389 191,909 376 3,409 224,346 164,092 19,175 19,812 21,267 18,126
2010 228,555 3,886 43,634 177,631 306 3,098 211,068 157,314 18,983 20,192 14,578 17,487
AMOUNT 13,917 1,503 (2,245) 14,278 70 311 13,278 6,778 192 (381) 6,689 639
% 6.1 38.7 (5.1) 8.0 22.9 10.0 6.3 4.3 1.0 (1.9) 45.9 3.7
Assets Cash and cash equivalents Financial assets Loans and bonds receivable Investment assets of related companies Tangible and other assets Liabilities Depository liabilities Borrowings Bonds issued Other liabilities Shareholders equity
Asset Quality
Despite the increase in total loans, NPLs for the year were down significantly year-on-year, by 48.2% to KRW 2.9 trillion. This was due to the Banks continuing efforts to build asset soundness, improve the concentration of high-volume loans and spreading a culture of increasing accountability for preventing defaults. Moreover the Delinquency Ratio fell, down to 0.82%.
CHANGE
(Unit: KRW trillion)
2011 175.7 2.9 1.65 0.82
2010 168.1 5.6 3.34 0.99
AMOUNT 7.6 (2.7)
%, %p 4.5 (48.2) (1.69) (0.17)
Total loans NPLs NPL ratio(%) Delinquency Ratio(%)
Capital Adequacy
Several factors impacted on shareholders equity during the year, such as the accumulation of Capital Reserve for Credit Loss and the repayment of hybrid securities. The Tier 1 ratio, however, despite falling slightly, still stood at 10.74%, and although the BIS ratio also slightly dropped, still remained strong at 13.78%.
(Unit:%)
2011 10.74 13.78
2010 11.40 14.65
CHANGE (%p) (0.66) (0.87)
Tier 1 ratio BIS ratio
FINANCIAL REVIEW
Independent Auditors Report

English Translation of a Report Originally Issued in Korean
To the Shareholder and the Board of Directors of Woori Bank
We have audited the accompanying consolidated financial statements of Woori Bank and its subsidiaries (the Group). The financial statements consist of the consolidated statements of financial position as of December 31, 2011, December 31, 2010 and January 1, 2010, respectively, and the related consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows, all expressed in Korean won, for the years ended December 31, 2011 and 2010, respectively. The Groups management is responsible for the preparation and fair presentation of the consolidated financial statements and our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Group as of December 31, 2011, December 31, 2010 and January 1, 2010, respectively, and the results of its operations and its cash flows for the years ended December 31, 2010 and 2011, respectively, in conformity with Korean International Financial Reporting Standards (K-IFRS).
Accounting principles and auditing standards and their application in practice vary among countries. The accompanying consolidated financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying consolidated financial statements are for use by those knowledgeable about Korean accounting procedures and auditing standards and their application in practice.
March 12, 2012
Notice to Readers This report is effective as of March 12, 2012, the auditors report date. Certain subsequent events or circumstances may have occurred between this auditors report date and the time the report is read. Such events or circumstances could significantly affect the accompanying consolidated financial statements and may result in modifications to the auditors report.
WOORI BANK
Woori Bank And Subsidiaries Consolidated Statements Of Financial Position

AS OF DECEMBER 3 1, 2011, DECEMBER 31, 2010 AND JANUARY 1, 2010
(Unit : Korean Won In millions)
December 31, 2011
December 31, 2010
January 1, 2010
ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss (Notes 7, 11 and 18) Available-for-sale financial assets (Notes 8, 11 and 18) Held-to-maturity financial assets (Notes 9, 11 and 18) Loans and receivables (Notes 10, 11 and 18) Investments in associates (Note 12) Investment properties (Note 13) Premises and equipment, net (Note 14) Intangible assets, net (Note 15) Other assets (Note 16) Current tax assets Deferred tax assets Derivative assets (Notes 11 and 25)
\ 5,389,267 11,317,845 14,670,607 15,400,425 191,909,032 376,337 349,459 2,345,960 147,387 225,530 2,393 9,249 326,413 2,258 \ 242,472,162
\ 3,885,684 11,104,050 16,610,090 15,920,317 177,630,875 306,229 366,874 2,334,386 39,366 207,467 2,833 8,283 133,224 5,185 \ 228,554,863
\ 5,040,146 12,334,845 16,702,454 12,527,029 176,849,334 248,832 391,963 2,358,890 68,143 251,542 16,377 22,669 107,508 7,609 \ 226,927,341
Assets held for sale (Note 17) Total assets LIABILITIES Financial liabilities at fair value through profit or loss (Notes 11 and 19) Deposits due to customers (Notes 11 and 20) Borrowings (Notes 11 and 21) Debentures (Notes 11 and 21) Provisions (Notes 22 and 23) Current tax liabilities Other financial liabilities (Notes 11 and 24) Other liabilities (Note 24) Deferred tax liabilities Derivative liabilities (Notes 11 and 25) Total liabilities
(Continued)
\ 3,509,566 164,092,476 19,174,642 19,811,813 607,612 206,367 16,346,969 444,549 126,446 25,582 \ 224,346,022
\ 4,729,575 157,314,309 18,982,971 20,192,427 519,829 109,283 8,799,937 277,757 107,425 34,419 \ 211,067,932
\ 5,764,546 150,124,550 20,752,335 23,476,103 550,761 5,715 8,429,081 693,182 146,104 64,597 \ 210,006,974
FINANCIAL REVIEW
Woori Bank And Subsidiaries Consolidated Statements Of Financial Position (Continued)

AS OF DECEMBER 31, 2011, DECEMBER 31, 2010 AND JANUARY 1, 2010
(Unit : Korean Won In millions)
December 31, 2011
December 31, 2010
January 1, 2010
EQUITY Owners equity: Capital stock (Note 27) Hybrid securities (Note 27) Capital surplus (Note 27) Other equity (Note 28) Retained earnings (Note 29) (Planned regulatory reserve for credit loss) (Note 30) Non-controlling interests Total equity Total liabilities and equity
See accompanying notes to consolidated financial statements.
\ 3,829,783 1,681,807 812,016 538,385 11,256,207 (1,123,866) 18,118,198 7,942 18,126,140 \ 242,472,162
\ 3,829,783 2,181,806 811,421 938,260 9,718,577 (513,676) 17,479,847 7,084 17,486,931 \ 228,554,863
\ 3,829,783 2,181,806 811,993 1,192,263 8,898,270 16,914,115 6,252 16,920,367 \ 226,927,341
WOORI BANK
Woori Bank And Subsidiaries Consolidated Statements Of Comprehensive Income

(Unit : Korean Won In millions, except for income per share data)
2011
2010
OPERATING INCOME: Net interest income (Note 32): Interest income Interest expense Net fees and commissions income (Note 33): Fees and commissions income Fees and commissions expense Dividend income (Note 34) Gain on financial instruments at fair value through profit or loss (Note 35) Gain on available-for-sale financial assets (Note 36) Impairment losses for loans, other receivables, guarantees and unused commitments (Note 38) General and administrative expenses (Note 39)
\ 11,659,258 5,933,662 5,725,596 993,929 485,938 507,991 123,150 106,682 1,016,746 (1,816,603)
\ 10,981,048 5,954,286 5,026,762 931,530 437,737 493,793 119,095 15,213 978,546 (2,496,083)
Employee compensation and benefits Depreciation Other general and administrative expenses Net other operating income (expenses) (Note 39) SHARE OF PROFITS (LOSSES) OF ASSOCIATES NET INCOME BEFORE INCOME TAX EXPENSE INCOME TAX EXPENSE NET INCOME (Note 30) (Net income after the planned reserves provided for the year ended December 31, 2011: \1,459,182) Net income attributable to owner Net income attributable to the non-controlling interests
(Continued)
(1,189,959) (126,740) (1,236,094) (2,552,793) (427,685) 2,683,084 (23,913) 2,659,171 589,800 \ 2,069,371 2,068,544 827
(983,279) (125,682) (1,154,545) (2,263,506) (376,191) 1,497,629 39,224 1,536,853 274,749 \ 1,262,104 1,261,283 821
FINANCIAL REVIEW
Woori Bank And Subsidiaries Consolidated Statements Of Comprehensive Income (Continued)

(Unit : Korean Won In millions, except for income per share data)
2011 \ (396,510) (22,348) 12,152 6,868 (399,838) \ 1,669,533 1,668,675 858 \ 2,687 \ 2,514
2010 \ (219,681) (22,255) (13,108) 1,170 (253,874) \ 1,008,230 1,007,276 954 \ 1,508 \ 1,443
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: Loss on valuation of available-for-sale financial assets Share of other comprehensive loss on investment in associates Gain (loss) on overseas business translation Gain on valuation of cash flow hedge TOTAL COMPREHENSIVE INCOME Comprehensive income attribute to owner Comprehensive income attribute to the non-controlling interests NET INCOME PER SHARE: (In Korean Won) (Note 41) Basic earnings per common share Diluted earnings per common share
WOORI BANK
Woori Bank And Subsidiaries Consolidated Statements Of Changes In Equity

FOR YEARS ENDED DECEMBER 31, 2011 AND 2010 Gain (loss) on valuation of available-forsale financial assets
\ 1,159,619 (219,681)
(Unit : Korean Won In million)
Capital stock
\ 3,829,783 -
Hybrid securities
\ 2,181,806 -
Capital surplus
\ 811,529 -
Gain (loss) on valuation of cash flow risk hedge

\ (10,468) -
Gain (loss) on overseas business translation

\-
Share of other comprehensive loss on associates

\ 43,112 -
Other
\-
Retained earnings
\ 8,975,782 (441,618) 1,261,283 -
Controlling equity
\ 16,947,901 (441,618) 1,261,283 (219,681)
Noncontrolling equity
\ 6,252 (122) 821 -
Total Equity
\ 16,920,367 (441,740) 1,262,104 (219,681)
Balance as of January 1, 2010 Dividends Net income Variation of availablefor-sale financial assets Foreign currency translation Cash flow hedge Changes in equity of investment in associates Other Balance as of December 31, 2010 Balance as of January 1, 2011 Dividends 75 _ 2011 ANNUAL REPORT Redemption of hybrid securities Net income Variation of availablefor-sale financial assets Foreign currency translation Cash flow hedge Changes in equity of investment in associate Other Balance as of December 31, 2011
\ 3,829,783
\ 2,181,806
(572) \ 811,421
\ 939,938
1,170 \ (9,298)
(13,241) \(13,241)
(22,255) \ 20,857
4 \4
642 \ 9,718,577
(13,241) 1,170 (22,255) 74 \ 17,479,847
133 \ 7,084
(13,108) 1,170 (22,255) 74 \ 17,486,931
\ 3,829,783 -
\ 2,181,806 (499,999) -
\ 811,421 -
\ 939,938 (396,510)
\ (9,298) -
\ (13,241) -
\ 20,857 -
\4 (1) -
\ 9,718,577 (530,273) 2,068,544 -
\ 17,479,847 (530,273) (500,000) 2,068,544 (396,510)
\ 7,084 827 -
\ 17,486,931 (530,273) (500,000) 2,069,371 (396,510)
74
\ 3,829,783
\ 1,681,807
595 \ 812,016
\ 543,428
6,868 \ (2,430)
12,121 \ (1,120)
(22,348) \ (1,491)
(5) \ (2)
(641) \ 11,256,207
12,121 6,868 (22,348) (51) \ 18,118,198
31 \ 7,942
12,152 6,868 (22,348) (51) \ 18,126,140
FINANCIAL REVIEW
Woori Bank And Subsidiaries Consolidated Statements Of Cash Flows

2011
2010
CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustment to net income: Interest income Interest expense Dividend income Income tax expense Additions of expenses not involving cash outflows: Impairment losses for loans, other receivables, guarantees and unused commitments Loss on disposal of premises and equipment, intangible assets and investment properties Depreciation and amortization of premises and equipment, intangible assets and investment properties Impairment loss on premises and equipment, intangible assets and investment properties Loss on valuation of derivatives Loss on transaction of derivatives Loss on fair value hedged items Retirement benefits Provisions Loss on valuation of investment in associates Loss on disposal of investment in associates Deductions of revenues not involving cash inflows: Gain on available-for-sale financial assets Gains on disposal of premises and equipment, intangible assets and investment properties Reversal of impairment loss on premises and equipment, intangible assets and investment properties Gain on disposal of assets held for sale Gain on valuation of derivatives Gain on transaction of derivatives Gain on fair value hedged items Gain on valuation of investment in associates Gain on disposal of investment in associates 1,016,746 8,839 321 56,327 193,141 233 4,921 4,355 26,231 1,311,114
(Continued)
\ 2,069,371 (11,659,258) 5,933,662 (123,150) 589,800 (5,258,946) 1,816,603 2,675 126,740 4,614 4,872 5,641 200,455 100,582 2,654 28,268 2,293,104
\ 1,262,104 (10,981,048) 5,954,286 (119,095) 274,749 (4,871,108) 2,496,083 4,526 125,682 8,530 23,224 27,489 163,777 81,162 12,365 4,778 6 2,947,622 978,546 357 966 122,834 6,921 40,575 44,002 1,194,201
WOORI BANK
Woori Bank And Subsidiaries Consolidated Statements Of Cash Flows (Continued)

FOR YEARS ENDED DECEMBER 31, 2011 AND 2010
2011
2010
Changes in operating assets and liabilities: Decrease (increase) in financial instruments at fair value through profit or loss Increase in loans and receivables Decrease (increase) in other assets Increase in deposits due to customers Decrease in provisions Increase in other financial liabilities Increase (decrease) in other liabilities \ (1,433,804) (15,971,167) (38,933) 6,778,167 (122,730) 7,424,755 182,271 (3,181,441) Interest income received Interest expense paid Dividend received Income taxes paid Net cash provided by operating activities
\ 195,824 (3,272,047) 40,337 7,189,758 (131,434) 73,588 (415,235) 3,680,791 10,888,755 (5,656,903) 119,095 (110,286) 7,065,869
11,618,277 (5,816,405) 123,150 (361,384) 174,612
CASH FLOWS FROM INVESTING ACTIVITIES: Cash in-flows from investing activities: Disposal of available-for-sale financial assets Disposal of held-to-maturity financial assets Disposal of investment in associates Dividends received from investment in associates Disposal of investment properties Disposal of premises and equipment Disposal of intangible assets Disposal of assets held for sale 11,088,564 5,761,763 139,328 67 11,780 10,637 1,466 5,644 17,019,249 Cash out-flows from investing activities: Acquisition of available-for-sale financial assets Acquisition of held-to-maturity financial assets Acquisition of investment in associates Acquisition of premises and equipment Acquisition of intangible assets Net cash provided by (used in) investing activities
(Continued)
11,258,748 6,481,737 5,510 63,260 12,537 394 150 17,822,336
8,504,277 5,323,490 222,100 92,538 157,454 14,299,859 2,719,390
10,475,176 9,882,815 2,277 56,565 11,100 20,427,933 (2,605,597)
FINANCIAL REVIEW
Woori Bank And Subsidiaries Consolidated Statements Of Cash Flows (Continued)

2011
2010
CASH FLOWS FROM FINANCING ACTIVITIES: Cash in-flows from financing activities: Issue of borrowings Issue of debentures Increase in hedging derivatives Cash out-flows from financing activities: Repayment of borrowings Repayment of debentures Decrease in hedging derivatives Repayment of hybrid securities Dividends paid Net cash used in financing activities Effects of exchange rate changes on cash and cash equivalents NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF THE YEAR
\ 4,521,806 3,020,798 193,666 7,736,270 4,330,135 3,590,090 204,027 500,000 530,273 9,154,525 (1,418,255) 27,836 1,503,583 3,885,684 \ 5,389,267
\ 2,706,394 6,368,785 102,643 9,177,822 4,475,758 9,777,043 77,995 441,618 14,772,414 (5,594,592) (20,142) (1,154,462) 5,040,146 \ 3,885,684
WOORI BANK
Woori Bank And Subsidiaries Notes To Consolidated Financial Statements

1. GENERAL
(1) Woori Bank
Woori Bank (hereafter referred to as, the Bank or the Parent or the Company) was established in 1899 and is engaged in the commercial banking business under the Banking Law, trust business under the Financial Investment Services and Capital Market Act and foreign exchange business with approval from the Bank of Korea (BOK) and the Ministry of Finance and Economy (MOFE). On March 27, 2001, Korea Deposit Insurance Corporation (KDIC) established Woori Finance Holdings Co., Ltd. (WFH). The Bank is a wholly owned subsidiary of WFH as of December 31, 2011. The Banks common stock and preferred stock amount, expressed in Korean Won (the KRW or \), to \3,479,783 million and \350,000 million, respectively, and the Banks common and preferred shares issued and outstanding as of December 31, 2011 are 696 million shares and 70 million shares, respectively. The head office of the Bank is located in Seoul, Korea. The Bank has 942 branches and offices in Korea, and 16 branches and offices in overseas.
(2) Subsidiaries 1) The Bank and its subsidiaries (the Group) have the following subsidiaries (Unit: Korean Won in millions, USD in thousands, RUB in 100 millions, IDR in millions):
December 31, 2011 Main business Credit information Banking Banking Banking Banking Banking Financial service Financial service Number of shares owned 1,008,000 24,500,000 1,618 39,000,000 19,999,999 93,393,568 600,000 Percentage of ownership (%) 100.0 100.0 95.2 100.0 100.0 100.0 100.0 100.0 Financial statements as of Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
Subsidiaries Woori Credit Information Co., Ltd. Woori America Bank PT. Bank Woori Indonesia Woori Global Market Asia Limited Woori Bank China Limited ZAO Woori Bank Korea BTL Infrastructure Fund (*1) Woori Fund Service Co., Ltd. (*2)
Location Korea U.S.A Indonesia Hongkong China Russia Korea Korea
Capital stock KRW 5,000 USD 122,500 IDR 170,000 USD 50,000 USD 308,810 RUB 5 KRW 467,000 KRW 3,000
December 31, 2010 Subsidiaries Woori Credit Information Co., Ltd. Woori America Bank PT. Bank Woori Indonesia Woori Global Market Asia Limited Number of shares owned 1,008,000 24,500,000 1,618 39,000,000 Percentage of ownership (%) 100.0 100.0 95.2 100.0
January 1, 2010 Number of shares owned 1,008,000 10,500,000 1,618 39,000,000 Percentage of ownership (%) 100.0 100.0 95.2 100.0
FINANCIAL REVIEW
December 31, 2010 Subsidiaries Woori Bank China Limited ZAO Woori Bank Korea BTL Infrastructure Fund Number of shares owned 19,999,999 66,958,321 Percentage of ownership (%) 100.0 100.0 100.0
January 1, 2010 Number of shares owned 19,999,999 55,152,422 Percentage of ownership (%) 100.0 100.0 100.0
(*1) The Group decided to acquire 166,606,432 shares with an amount of \ 833,032 million on March 7, 2012, and the Groups total shares after the acquisition is 260,000,000 shares. (*2) During the year ended December 31, 2011, Woori Fund Service Co., Ltd. was established through a 100% capital contribution by the Bank, and accordingly is included in the consolidation.
2) For special purpose entities (SPE), in accordance with Korean International Financial Reporting Standards (K-IFRS) 2012 Consolidation-special purpose entities, entities which the Group has decision making power and/or carries the benefits and risks of such entities, are included in the consolidation. Details of special purposes entities under consolidation are as follows:
<December 31, 2011> Subsidiaries Kumho Trust 1st Co., Ltd.(*1) Woori IB Global Bond Co., Ltd. (*1) Asiana Saigong Inc. (*1) An-Dong Raja 1 Co., Ltd. (*1)
st
Location Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea
Main business Asset Securitization \ \ \ \ \ \ \ \ \ \ \ Trust Securities investment \ \ \ \ \ \
Percentage of owner-ship (%) 0.0 0.0 0.0 0.0 15.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 100.0 100.0 100.0 100.0 58.8 60.0
Financial statements as of December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31
KAMCO Value Recreation 1st Securitization Specialty Co., Ltd. (*1) IB Global 1st Co., Ltd. (*1) Hermes STX Co., Ltd. (*1) BWL 1 Co., LLC. (*1)
st
Consus 8 Co., LLC. (*1)

th
Real DW 2 Co., Ltd. (*1)

nd
Uri Pungsan Inc. (*1) Pyeongtaek Ocean Sand Inc. (*1) Woori Bank Preservation Trust of principal and interest (*2) Haeoreum Short-term Bond 15th (*3) (Unsold) G5 Pro Short-term 13th (*3) (Unsold) G6 First Class Mid-term E-20 (*3) (Unsold) G15 First Class Mid-term C-1 (*3) D First Class Mid-term C-151 (*3) Golden Bridge Sidus FNH video (*3) Golden Bridge NHN Online Private Equity Investment (*3)
WOORI BANK

Subsidiaries Woori CS Ocean Bridge 7th (*3) Woori Milestone Private Real Estate Fund 1st (*3) Woori Milestone China Real Estate Fund 1 (*3)
st
Location Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea
th
Main business \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \
Percentage of owner-ship (%) 61.1 94.8 80.7 75.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Financial statements as of December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31
Consus Sakhalin Real Estate Investment Trust 1 (*3)

st
Woori Partner Plus Private Equity Securities 4 (*3)

th
Allianz Blue Ocean Private Trust 5th (*3) Mirae Asset Maps Blue Chips Private Trust 2nd (*3) Hyundai Advantage Private Trust 14 (*3)
th
Kyobo Axa Long Short Private Trust 2 (*3)

nd
Hanhwa Quant Long Short Private Equity3 (*3)

rd
Woori Frontier Alpha Private Equity 8th (*3) Midas Private Investment Trust W-3 (*3)
rd
Consus Private Securities Investment Trust 54 (*3) Woori Partner Plus Private Trust 7 (*3)
th
Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea
Yurie WB Private Investment Trust 3rd (*3) KDB Private Equity Securities Investment Trust WB 2nd (*3) Samsung Plus Private Investment Trust 13 (*3)
th
Hanwha Smart Private Trust 43 (*3)

rd
Eugene Pride Private Trust 21 (*3)

st
Meritz Prime Private Trust 42nd (*3) Woori Partner Plus Private Equity Securities 8th (*3) Woori Partner Plus Private Equity Securities 9 (*3)
th
Hanwha Smart Private Trust 50 (*3)

th
(*1) Classified as SPE for asset securitization. The Group has less than majority ownership for the SPE, but included in consolidation scope considering the activities of the SPE, decisionmaking power maintained by the Group, and the benefits and risks carried by the Group. (*2) Classified as SPE for money trust under trust business law. The Group has less than majority ownership for the SPE, but included in consolidation scope considering the activities of the SPE, decision-making power maintained by the Group, and the benefits and risks carried by the Group (*3) Classified as SPE for investing in securities and others and included in consolidation scope considering the activities of the SPE, decision-making power maintained by the Group, and the benefits and risks carried by the Group.
<December 31, 2010> Subsidiaries Woori Moa Conduit Co., Ltd. Hyundai Glory 1st Co., Ltd. KDB Capital 1 Co., Ltd.
st
Location Korea Korea Korea Korea
Main business Asset Securitization \ \ \
Percentage of owner-ship (%) 0.0 0.0 0.0 0.0
Financial statements as of December 31 December 31 December 31 December 31
Vivaldi HL 1st Co., Ltd.
FINANCIAL REVIEW
Subsidiaries Swan SF Co., Ltd. Kumho Trust 1st Co., Ltd. Woori IB Global Bond Co., Ltd. Asiana Saigong Inc. An-Dong Raja 1 Co., Ltd.
st
Location Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea
st
Main business \ \ \ \ \ \ \ \ \ \ Trust Securities investment \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \
Percentage of owner-ship (%) 0.0 0.0 0.0 0.0 0.0 15.0 0.0 0.0 0.0 0.0 0.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Financial statements as of December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31
KAMCO Value Recreation 1st Securitization Specialty Co., Ltd. (*1) IB Global 1st Co., Ltd. Hermes STX Co., Ltd. BWL 1 Co., LLC.
st
Consus 8 Co., LLC.

th
Real DW 2nd Co., Ltd. Woori Bank Preservation Trust of principal and interest KTB Smart 90 Private Security 2nd Hanvit Open-End High Yield HV 1 Mid-term D-2
nd th
Korea Korea Korea Korea Korea Korea Korea

nd
Hanhwa Smart Private Security 19
My Asset Private Security Investment Trust W- 1st Eugene Pride Private Investment Security 12th (Bond) Consus Private Security Investment Trust 29 Hi-Smart Private Security 1
st th
Woori Frontier Short-term Private 2
Korea Korea Korea

nd
Woori Frontier Alpha Quant Private Equity 3rd Meritz Prime Private Trust1st Yurie WB Private Security Investment Trust 2 KDB Private Security Investment Trust WB-1 Samsung Plus Private Security 7
th
Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea
th
st
Eugene Pride Private Investment Security 14th (Bond) Hanhwa Smart Private Security Investment Trust 33 Taurus 1 Brain 3
rd st th
Meritz Prime Private Trust 5th Prudential Quant Long-Short Private Trust 1st Prudential Quant Long-Short Private Trust 2
nd
Woori Partner Plus Private Security Investment Trust 6 Haeoreum Short-term Bond 15
th
Korea Korea
WOORI BANK

Subsidiaries (Unsold) G5 Pro Short-term 13th (Unsold) G6 First Class Mid-term E-20 (Unsold) G15 First Class Mid-term C-1 D First Class Mid-term C-151 Golden Bridge Sidus FNH video Golden Bridge NHN Online Private Equity Investment Woori CS Ocean Bridge 7th Woori Milestone Private Real Estate Fund 1 Woori Milestone China Real Estate Fund 1
st
Location Korea Korea Korea Korea Korea Korea Korea Korea Korea
st
Main business \ \ \ \ \ \ \ \ \ \ \
Percentage of owner-ship (%) 100.0 100.0 100.0 100.0 58.8 60.0 61.1 94.8 80.7 75.0 100.0
Financial statements as of December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31
st
Consus Sakhalin Real Estate Investment Trust 1 Woori Partner Plus Private Equity Securities 4th
Korea Korea
<January 1, 2010>
82
Subsidiaries Woori Frontier Co., LLC. Purun Woori First Co., Ltd. Change Up B Co., Ltd. Woori ship Mortgage 2-2 ABCP Co., Ltd.
nd
Location Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea
st
Main business Asset Securitization \ \ \ \ \ \ \ \ \ \ \ \ \ \ Trust Securities investment \
Percentage of owner-ship (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.0 0.0 0.0 100.0 100.0
Financial statements as of December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31
Woori Moa Conduit Co., Ltd. Hyundai Glory 1st Co., Ltd. KDB Capital 1 Co., Ltd.
st
Vivaldi HL 1 Co., Ltd.

st
Swan SF Co., Ltd. Kumho Trust 1st Co., Ltd. Woori IB Global Bond Co., Ltd. Asiana Saigong Inc. An-Dong Raja 1 Co., Ltd.
st
KAMCO Value Recreation 1 Securitization Specialty Co., Ltd. (*1) Consus 8th Co., LLC. Woori Bank Preservation Trust of principal and interest KTB Smart 90 Private Security 2nd Hanvit Open-End High Yield hv 1st
Korea Korea Korea Korea Korea
FINANCIAL REVIEW
Subsidiaries Mid-term D-2

nd th
Location Korea Korea Korea Korea Korea Korea Korea Korea Korea Korea
st
Main business \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \
Percentage of owner-ship (%) 100.0 100.0 100.0 100.0 100.0 100.0 100.0 58.8 60.0 61.1 94.8 98.5 75.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Financial statements as of December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31
Hanhwa Smart Private Security 19 Haeoreum Short-term Bond 15th (Unsold) G5 Pro Short-term 13th
(Unsold) G6 First Class Mid-term E-20 (Unsold) G15 First Class Mid-term C-1 D First Class Mid-term C-151 Golden Bridge Sidus FNH video Golden Bridge NHN Online Private Equity Investment Woori CS Ocean Bridge 7
th
Woori Milestone Private Real Estate Fund 1 Woori Milestone China Real Estate Fund 1
Korea Korea Korea Korea
st
Consus Sakhalin Real Estate Investment Trust 1st My Asset Private Ace Bond 26
th st nd
Eugene Best Plan Private Bond 31

nd
Prudential Private Investment Trust 2
Hana UBS Private Security Investment Trust 8th Mirae Asset Maps Platinum Alpha 2nd Mirae Asset Maps Alpha Arbitrage Private Woori Frontier Alpha Quant Private Equity 2 Consus Private Security Investment Trust 12
Korea Korea Korea Korea Korea Korea
th
GS Asset Allocation Private Security Investment Trust 1st Trustone Private Security Investment Trust 1st KTB Smart 90 Private Security 4 Leo 1
st st th
Brain 1 Leo 2nd
Korea Korea
st
Woori Supreme 1 Gaul 1

st
Korea Korea
st
Yurie WB Private Security Investment Trust 1 (Bond) Woori Partner Plus Private Equity Securities 3rd Wise Private Security Investment Trust 24th Eugene Pride Private Security Investment Trust 2 (Bond)
nd
G3 First Class Mid-term B-90
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3) Details of special purpose entities newly included in consolidation scope for the year ended December 31, 2011 are as follows:
Special Purposed Entities Uri Pungsan Inc. Pyeongtaek Ocean Sand Inc. Allianz Blue Ocean Private 5th Mirae Asset Maps Blue Chips Private 2nd Hyundai Advantage Private 14th Kyobo Axa Long Short Private Trust 2nd Hanhwa Quant Long Short Private 3rd Woori Frontier Alpha Private Equity 8th Midas Private Investment Trust W 3rd Consus Private Security Investment Trust 54th Woori Partner Plus Private Equity Securities 7th Yurie WB Private Investment Trust 3rd KDB Private Equity Securities Investment Trust WB 2nd Samsung Plus Private Investment Trust 13th Hanwha Smart Private Trust 43rd Eugene Pride Private Trust 21st Meritz Prime Private Trust 42nd Woori Partner Plus Private Equity Securities 8th Woori Partner Plus Private Equity Securities 9th Hanwha Smart Private Trust 50th
Reasons Classified as a SPE for asset securitization. The activities of entities, decision-making powers and benefits and risks are considered when those SPEs are consolidated even if the Group has less than majority ownership for them. Classified as SPE for investing in securities and other. The activities of entities, decision-making powers and benefits and risks are considered when those SPEs are consolidated.
4) Details of special purpose entities excluded from consolidation for the year ended December 31, 2011 are as follows:
Special Purposed Entities Woori Moa Conduit Co., Ltd. Hyundai Glory 1st Co., Ltd. KDB Capital 1st Co., Ltd. Vivaldi HL 1st Co., Ltd. Swan SF Co., Ltd. KTB Smart 90 Private Security 2nd Hanvit Open-End High Yield HV 1st Mid-term D-2nd Hanhwa Smart Private Security 19th My Asset Private Security Investment Trust W-1st Disposal and repayment of beneficiary certificates Expiration of the contract or liquidation stopped from the Group from bearing the majority of the risk resulting from the operation of entities. Reasons
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Special Purposed Entities Eugene Pride Private Investment Security 12 (Bond)

th
Reasons
Consus Private Security Investment Trust 29th Hi-Smart Private Security 1st Woori Frontier Short-term Private 2nd Woori Frontier Alpha Quant Private Equity 3rd Meritz Prime Private Trust 1st Yurie WB Private Security Investment Trust 2nd KDB Private Security Investment Trust WB-1st Samsung Plus Private Investment Trust 7th Eugene Pride Private Security Investment Trust 14th (Bond) Hanhwa Smart Private Security 33rd Taurus 1st Brain 3rd Meritz Prime Private Trust 5th Woori Partner Plus Private Equity Securities 5th Prudential Quant Long-Short Private Trust 1st Prudential Quant Long-Short Private Trust 2nd Woori Partner Plus Private Security Investment Trust 6th
5) Details of special purpose entities newly included in consolidation scope for the year ended December 31, 2010 are as follows:
Special Purposed Entities IB Global 1 Co., Ltd.
st
Reasons Classified as a SPE for asset securitization. The activities of entities, decision-making powers and benefits and risks are considered when those SPEs are consolidated even if the Group has less than majority ownership for them.
Hermes STX Co., Ltd. BWL 1st Co., LLC. Real DW 2nd Co., Ltd. My Asset Private Security Investment Trust W-1st Eugene Pride Private Investment Security 12th (Bond) Consus Private Security Investment Trust 29th Hi-Smart Private Security 1st Woori Frontier Short-term Private 2nd Woori Frontier Alpha Quant Private Equity 3rd Meritz Prime Private Trust 1st Yurie WB Private Security Investment Trust 2nd KDB Private Security Investment Trust WB-1st Samsung Plus Private Investment Trust 7th
Classified as SPE for investing in securities and other. The activities of entities, decision-making powers and benefits and risks are considered when those SPEs are consolidated.
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Special Purposed Entities Eugene Pride Private Security Investment Trust 14 (Bond)
th
Reasons
Hanhwa Smart Private Security 33rd Taurus 1st Brain 3rd Meritz Prime Private Trust 5th Woori Partner Plus Private Equity Securities 5th Prudential Quant Long-Short Private Trust 1st Prudential Quant Long-Short Private Trust 2nd Woori Partner Plus Private Equity Securities 6th Woori Partner Plus Private Equity Securities 4th
6) Details of special purpose entities excluded from consolidation for the year ended December 31, 2010 are as follows:
Special Purposed Entities Woori Frontier Co., LLC. Purun Woori 1st Co., Ltd. Change Up B Woori ship Mortgage 2nd ABCP Co., Ltd. My Asset Private Ace Bond 26th Eugene best plan Private Trust 31st Prudential Private Investment Trust 2nd Hana UBS Private Security Investment Trust 8th Mirae Asset Maps Platinum Alpha 2 Mirae Asset Maps Arbitrage Private Woori Frontier Alpha Quant Private 2nd Consus Private Security Investment Trust 12th GS Asset Allocation Private Security Investment Trust 1st Trustone Private Security Investment Trust 1st KTB Smart 90 Private Security 4th Leo 1st Brain 1st Leo 2nd Woori Supreme 1st Gaul 1st Yurie WB Private Security Investment Trust 1st (Bond) Woori Partner Plus Private Equity Securities 3rd
nd
Reasons
Expiration of the contract or liquidation stopped from the Group from bearing the majority of the risk resulting from the operation of entities.
Disposal and repayment of beneficiary certificates
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Special Purposed Entities Wise Private Security Investment Trust 24th Eugene Pride Private Security Investment Trust 2nd (Bond) G3Top-Notch Mid-term B-90
Reasons
7) Summarized statements of financial position as of December 2011 and 2010, respectively, and comprehensive income statements for the years ended December 31, 2011 and 2010, respectively, of subsidiaries, whose financial information are included on the consolidated financial statements, are as follows (Unit: Korean Won in millions):
<December 31, 2011> Subsidiaries Woori Credit Information Co., Ltd. Woori America Bank PT. Bank Woori Indonesia Woori Global Market Asia Limited Woori Bank China Limited ZAO Woori Bank Korea BTL Infrastructure Fund Woori Fund Service Co., Ltd. Woori Bank Preservation Trust of principal and interest SPEs under consolidation Beneficiary Certificates under consolidation Assets \ 30,148 1,102,653 643,915 189,541 2,995,451 350,235 473,983 2,719 8,285 896,711 1,654,962 Liabilities \ 3,811 965,740 479,248 136,536 2,562,582 329,099 187 361 8,285 1,065,745 44,479 Equity \ 26,337 136,913 164,667 53,005 432,869 21,136 473,796 2,358 (169,034) 1,610,483 Net income (loss) \ 3,340 1,953 17,149 (8,776) 22,884 1,590 24,637 (596) (10,522) 8,458 Total comprehensive income (loss) \ 3,340 3,857 17,808 (8,353) 28,919 712 24,637 (596) (21,606) 11,213
<December 31, 2010> Subsidiaries Woori Credit Information Co., Ltd. Woori America Bank PT. Bank Woori Indonesia Woori Global Market Asia Limited Woori Bank China Limited ZAO Woori Bank Korea BTL Infrastructure Fund Woori Bank Preservation Trust of principal and interest SPEs under consolidation Assets \ 29,433 1,196,801 487,557 182,730 2,237,662 170,027 340,478 8,483 1,019,267 Liabilities \ 3,916 1,063,745 340,697 121,372 1,833,707 149,603 137 8,483 1,166,656 Equity \ 25,517 133,056 146,860 61,358 403,955 20,424 340,341 (147,389) Net income (loss) \ 3,425 (70,283) 17,012 3,361 14,255 956 21,067 95,629 Total comprehensive income (loss) \ 3,425 (73,314) 19,780 1,861 4,162 296 21,067 108,516
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Subsidiaries Beneficiary Certificates under consolidation
Assets 1,814,661
Liabilities 260,267
Equity 1,554,394
Net income (loss) 52,110
Total comprehensive income (loss) 52,802
8) Summarized statements of financial position as of January 1, 2010 of subsidiaries, whose financial information are included on the consolidated financial statements, are as follows (Unit: Korean Won in millions):
Subsidiaries Woori Credit Information Co., Ltd. Woori America Bank PT. Bank Woori Indonesia Woori Global Market Asia Limited Woori Bank China Limited ZAO Woori Bank Korea BTL Infrastructure Fund Woori Bank Preservation Trust of principal and interest Special Purpose Entities under consolidation Beneficiary Certificates under consolidation
Assets \ 28,734 1,247,557 408,585 185,497 1,752,633 151,349 279,909 12,044 1,292,047 944,431
Liabilities \ 4,122 1,122,002 278,978 126,001 1,352,845 131,221 115 12,044 1,549,720 133,137
Equity \ 24,612 125,555 129,607 59,496 399,788 20,128 279,794 (257,673) 811,294
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Basis of financial statement presentation.
The Group has adopted K-IFRS from the fiscal year beginning on January 1, 2011 and the accompanying consolidated financial statements are prepared on K-IFRS. In accordance with K-IFRS 1101 First-time Adoption of International Financial Reporting Standards , the transition date to K-IFRS is January 1, 2010. An explanation of how the transition to K-IFRS has affected the financial position as of January 1, 2010 (date of transition), December 31, 2011 and December 31, 2010, and comprehensive income for the year ended December 31, 2011 and 2010 of the Company is provided in Note 47 Transition Effects of K-IFRS. The Group maintains its official accounting records in Korean Won and prepares consolidated financial statements in conformity with K-IFRS, in the Korean language (Hangul). Accordingly, these consolidated financial statements are intended for use by those who are informed about K-IFRS and Korean practices. The accompanying consolidated financial statements have been condensed and restructured into English with certain expanded descriptions from the Korean language financial statements. Major accounting policies used for the preparation of the consolidated financial statements are stated below. Unless stated otherwise, these accounting policies have been applied consistently to the financial statements for the current period and accompanying comparative period. The companys financial statement has been filled out based on the historical cost method except for specific non-current assets and certain financial assets. The preparation of consolidated financial statements under K-IFRS requires the application of certain accounting estimates and the Group prepared its financial statements by management judgement for critical accounting estimates.
FINANCIAL REVIEW
The accompanying consolidated financial statements were approved by the board of directors on March 7, 2012.
(2) Basis of consolidation 1) Subsidiary

An entity which the Group (including special purpose entities) has power to govern the financial and operating policies is considered a subsidiary. In general, an entity which the Group has over 50% voting power in is considered a subsidiary. Special purpose entities established for certain limited purposes may be considered as a subsidiary of the Company; even though the Company may have less than 50% of the voting power, if the Company has the decision-making power over the special purpose entitys activities, risk and benefit. The existence of the potential voting power available to exercise or to convert, presently, is considered when evaluating whether or not the Group has control over an entity. An entity is included in the consolidation, as a subsidiary, once such control is established, while it is excluded from consolidation once it is loses such control. . Acquisitions of subsidiaries are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, equity instruments issued by the Group and acquisition-related costs. At the acquisition date, the identifiable assets acquired, liabilities and contingent liabilities are recognized at their fair value at the acquisition date without reference to non-controlling interests. Any excess of the cost of acquisition over the Groups share of the net fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary recognized at the date of acquisition is recognized as goodwill; if less, the difference is directly recognized as other comprehensive income. When the Group transacts with each other, unrealized profits and losses resulting from the transactions are eliminated. When a subsidiary of the Group uses another accounting principle other than that of the Groups, necessary adjustments are made to the financial statements for the Groups purposes.
2) Non-controlling interests
The components of net income and other comprehensive income are attributed to the owners of the Group and the non-controlling interest holders. Total comprehensive income of subsidiaries is attributed to the owners of the Group and to the non-controlling interest holders, even if this results in the non-controlling interests having a deficit balance. Changes in the Groups ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions.
(3) Investments in associates

An associate is an entity over which the Group has significant influence but does not have direct or indirect control over. Significant influence is generally presumed to exist when the Group holds 20% or more, but less than 50%, of the voting rights. Such investments in associates are measured an acquisition cost at acquisition date and since then are accounted for using the equity method. The identifiable goodwill (net book value) is included in investment amounts in associate. The Groups interests in its associates income are recognized in the statement of consolidated comprehensive income. The changes in the associates retained earnings are recognized by the Company as retained earnings. However, when the Companys share in an associate changes due to a capital increase or decrease of the associate, such changes are recognized in other equity (change in interests of equity method securities). If the Groups share in an associates accumulated loss equals or exceeds the Groups equity interest, including unsecured receivables, in the associate, the Group suspends further recognition of its share of the associates loss. Unless in circumstances when the Group guarantees or is obligated to pay the associates payables.
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(4) Segment reporting

An operating segment is the level of business activity at which management reports to chief operating decision maker, for decision making purposes. In addition, the chief operating decision maker is responsible for evaluating the resources distributed to and the performance of an operating segment.
(5) Accounting for foreign currencies translations 1) Functional currency and presentation currency
The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements are expressed in Korean Won.
2) Translation of foreign currencies transactions and balances at the end of reporting period
In preparing the financial statements of the individual entities, transactions in currencies other than the entitys functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items that qualify as hedging instruments in a cash flow hedge and form part of the Groups net investment in a foreign operation are recognized in equity. The Company is recognizing amortized cost and exchange rate variation effect as gains and losses of current period and the variation on the fair value as other comprehensive gains and losses, respectively, both of which are effect of monetary securities of foreign currencies classified as available-for91 _ 2011 ANNUAL REPORT 90
sale financial instruments. And the company is recognizing the variation on fair value and exchange rate variation effect of non-monetary securities of foreign currencies classified as available-for-sale financial asset, as other comprehensive gains and losses.
3) Foreign currencies translation

Financial position and operating results of the Group are translated into the Groups reporting currency as follows: Description Statement of consolidated financial position Statement of consolidated comprehensive income The assets and liabilities are translated at the exchange rate prevailing at the end of the reporting period. Equity is translated at exchange rate at the time of acquisition. The statement of consolidated comprehensive income is translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used.
(6) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(7) Financial assets and financial liabilities 1) Classification of financial assets

Financial assets are classified into the following categories depending on the nature and purpose of possession: financial assets at fair value through profit or loss (FVTPL), loans and receivables, available-for-sale financial assets (AFS), and held-to-maturity investments (HTM).
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a) Financial assets at FVTPL

Financial assets are classified at FVTPL when the financial asset is either held for trading or designated at FVTPL. A financial asset is classified as held for trading if the following criteria are met: acquired or incurred principally to sell or repurchase during a short period of time part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if: such designation eliminates or significantly reduces a recognition or measurement inconsistency that would otherwise arise; or the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Groups documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or it forms part of a contract containing one or more embedded derivatives, and K-IFRS 1039 Financial Instruments: Recognition and Measurement permits the entire hybrid (combined) contract to be designated as at FVTPL
b) Loans and receivables

AFS financial assets are those non-derivatives financial assets that are either designated as AFS or are not classified as financial assets at FVTPL, HTM investments or loans and receivables.
c) AFS financial assets

AFS financial assets are those non-derivatives financial assets that are either designated as AFS or are not classified as financial assets at FVTPL, HTM investments or loans and receivables.
d) HTM financial assets

Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity are classified as HTM financial assets
2) Classification of financial liabilities

Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities measured at amortized cost.
a) Financial liabilities at FVTPL

Financial liabilities are classified at FVTPL when the financial liabilities is either held for trading or designated at FVTPL. A financial liability is classified as held for trading if the following criteria are met: acquired or incurred principally for the purpose of selling or repurchasing it in the near term part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking
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a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if: such designation eliminates or significantly reduces a recognition or measurement inconsistency that would otherwise arise; or the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Groups documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or it forms part of a contract containing one or more embedded derivatives, and K-IFRS 1039 Financial Instruments: Recognition and Measurement permits the entire hybrid (combined) contract to be designated as at FVTPL
b) Financial liabilities measured at amortized costs

Financial liabilities that are not classified as at FVTPL are measured at amortized costs. Deposits and debt securities that are not designated as at FVTPL are classified as financial liabilities measured at amortized costs.
3) Recognition and Measurement

Standard trading transaction of a financial asset is recognized at the date of transaction when the Group becomes a party to the contractual provisions of the asset. All types of financial instruments, except financial assets/liabilities at FVTPL, are measured at fair value at initial recognition plus transaction costs that are directly attributable to the acquisition (issuance). Financial assets/liabilities at FVTPL are initially recognized at fair value and transaction costs directly attributable to the acquisition (issuance) are recognized in the statement of comprehensive income. Financial assets/liabilities at FVTPL and AFS financial assets are subsequently measured at fair value. HTM financial assets, loans and receivables, and other financial liabilities are measured at amortized costs using the effective interest rate method. Interest income and expense in accordance with financial assets and liabilities are recognized in profit or loss on an accrual basis using the effective interest method. Gains or losses arising from changes in the fair value of the financial assets/liabilities at FVTPL are presented in the statement of comprehensive income during the period in which they arise. Changes in the fair value of AFS financial assets are measured in other comprehensive income. Dividends income of financial assets at FVTPL and AFS financial assets is recognized in profit or loss when the Groups right to receive the dividend is established. AFS financial assets recognize cumulative fair value adjustment, which is previously recognized in the equity, in profit or loss when disposing of assets or recognizing impairment loss.
4) Derecognition of financial assets and liabilities

The Group derecognizes a financial asset when the contractual right to the cash flows from the asset is expired, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another company. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. The Group derecognizes financial liabilities when, and only when, the Groups obligations are discharged, cancelled or they expire.
FINANCIAL REVIEW
(8) Offsetting financial instruments

Financial assets and liabilities are presented net in the statement of financial position when the Group has an enforceable legal right to set off and an intention to settle on a net basis or to realize an asset and settle the liability.
(9) Impairment of financial assets 1) Assets carried at amortized costs

The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset (or a group of financial assets) is impaired. A financial asset (or a group of financial assets) is regarded as impaired when there is objective evidence of impairment loss as a result of one or more events (hereinafter the loss event) that occurred after the initial recognition and the loss event has an impact on the estimated future cash flows of the financial asset. The criteria used to determine whether there is objective evidence of impairment include: significant financial difficulty of the issuer or obligor; or a breach of contract, such as a default or delinquency in interest or principal payments; or the lender, for economic or legal reasons relating to the borrowers financial difficulty, granting to the borrower a concession that the lender would not otherwise consider; or it becoming probability that the borrower will enter bankruptcy or financial re-organization; or the disappearance of an active market for the financial asset due to financial difficulties; or observable data indicating that there is a measurable decrease in the estimated future cash flows of a group of financial assets after initial recognition, although the decrease in the estimated future cash flows of individual financial assets included in the group is not identifiable. For individually significant financial assets, the Group assesses whether objective evidence of impairment exists individually, and it assesses for impairment of financial assets that are not significant on an individual or collective basis. If there is no objective evidence of impairment exists for financial assets individually assessed, the Group includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets for which the Group recognizes impairment based on an individual assessment or impairment loss is continuously recognized are not subject to a collective impairment assessment. The amount of impairment loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future credit loss that are not yet incurred), which is discounted at the financial assets original effective interest rate. The amount of loss is reduced directly from the assets carrying value or by using a provision account, and it is recognized in profit or loss. For loans and receivables or HTM financial assets with the variable interest rate, the current effective interest rate, which is determined under the contract, is used to measure impairment loss. Whether collateral inflow is probable or not, the present value of the estimated future cash ows of collateralized financial asset is calculated as the cash flows, which may arise from collateral inflow, less costs of acquiring and selling collateral. Future cash flows for a group of financial assets that are collectively assessed for impairment are estimated based on the historical loss experience of assets having credit risk characteristics, similar to those in the group of financial assets. If historical loss experience is not enough or not existed, similar corporations comparable historical loss experience of a group of financial assets is used. The effects of current conditions that do not have an impact in
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the historical loss experience period are reflected, and the historical loss experience is adjusted based on the current observable data in order to remove the effects of conditions that currently do not exist but existed in the historical loss experience period. For a collective assessment for impairment, financial assets are classified based on similar credit risk characteristics (i.e. based on the assessment of credit risk or grading process, considering asset type, industry, geographical location, collateral type, past-due status, and other relevant elements) indicating the debtors ability to pay all amounts of debt under the contractual terms. These characteristics are relevant to the estimation of future cash flows for groups of such assets as being indicative of the debtors ability to pay all amounts due according to the contractual terms of the assets being evaluated. When estimating the changes in future cash flows, observable data (i.e. an impairment loss arisen from a pool of assets, an unemployment rate indicating the loss and its parameter, asset price, product price, or payment status) needs to be consistently reflected. The methodology and assumptions used for estimating future cash flows are reviewed regularly to reduce the difference between loss estimates and actual loss experience. When the amount of impairment loss decreases subsequently and the decrease is related to an event occurred after the impairment is recognized (i.e. an improvement in the debtors credit rating), the previously recognized impairment loss is reversed directly from or by adjusting the provision account. The reversed amount is recognized in profit or loss of current period.
2) AFS financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that the Groups financial asset (or a group of financial
assets) is impaired. For debt securities, the Group uses the criteria refer to (9)-1) above. For equity investments classified as AFS financial assets, a significant or prolonged decline in the fair value below the cost is considered objective evidence of impairment. When the fair value of an AFS financial asset is decreased below its acquisition cost which is considered an objective evidence of impairment, the cumulative loss, amounting to the difference between the acquisition cost and the current fair value, is removed from other comprehensive income and recognized in profit or loss as an impairment loss. For AFS equity instruments, impairment losses recognized in profit or loss on equity instruments are not reversed in profit or loss. Meanwhile, when the fair value of AFS debt instrument increases in a subsequent period and the evidence is objectively related to an event occurred after recognizing the impairment loss, the impairment loss is reversed and recognized in profit or loss.
(10) Investment properties

The Group classifies the property held to earn rental or capital gain purpose as investment property. The investment property is measured at its cost at the initial recognition plus transaction costs arising at acquisition and after recognition, and is presented at cost less accumulated depreciation and accumulated impairment loss as carrying value. Subsequent costs are recognized in carrying amount of an asset or as an asset if it is probable that future economic benefits associated with the assets will flow into the Group and the cost of an asset can be measured reliably. Routine maintenance and repairs are expensed as incurred. While land is not depreciated, all other investment properties is depreciated based on the respective assets estimated useful lives using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
(11) Premises and equipment

Premises and equipment are stated at cost less subsequent accumulated depreciation and accumulated impairment losses. The cost of an item of premises and equipment is directly attributable to their purchase or construction, which includes any costs directly attributable to bringing the asset
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to the location and condition necessary for it to be capable of operating in the manner intended by management. It also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. However, under K-IFRS 1101 First-time Adoption of International Financial Reporting Standards, certain premises and equipment such as land and buildings were measured at fair value, which is regarded as deemed cost, at the date of transition to K-IFRS. Subsequent costs to replace part of the premises and equipment are recognized in carrying amount of an asset or as an asset if it is probable that the future economic benefits associated with the assets will flow into the Group and the cost of an asset can be measured reliably. The carrying amount of the replaced part is eliminated from the books. Routine maintenance and repairs are expensed as incurred. Premises and equipment are depreciated on a straight-line basis on the estimated economic useful lives as follows: Classification Buildings used for business purpose Structures in leased office Movable properties for business purposes Leased assets Useful life 40 years 5 years 5 years Of the same kind or with similar useful lives
The Group reviews the depreciation method, the estimated useful lives and residual values of fixed assets at the end of each annual reporting period. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate. When the carrying amount of a fixed asset exceeds the estimated recoverable amount, the carrying amount of such asset is reduced to the recoverable amount.
(12) Intangible assets 1) Goodwill

Any excess of the cost of acquisition over the Groups share of the net fair value of the identifiable assets acquired, liabilities and contingent liabilities assumed at the date of acquisition is recognized as goodwill. Such goodwill is classified as intangible assets. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss in the consolidated statement of comprehensive income. An impairment loss recognized for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
2) Development costs, patents and other intangible assets

Intangible assets are stated at the manufacturing cost or acquisition cost plus additional incidental expenses less accumulated amortization and accumulated impairment losses. Expenditures incurred in conjunction with development of new products or technology, in which the elements of costs can be individually identified and future economic benefits are probably expected, are capitalized as development costs under intangible assets. If the Group donates assets, such as buildings, to the government and is given a right to use or benefit from the assets, the donated assets are recorded as beneficial donated assets under intangible assets.
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Intangible assets are amortized using the straight-line method over the estimated useful lives, which are five years for development costs, contractual contact period for the beneficial donated assets, ten years for patents and five years for other intangible assets. The estimated useful life and amortization method are reviewed at the end of each reporting period. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate. Intangible assets, including goodwill and membership, with indefinite useful lives are tested for impairment annually. All other assets are tested for impairment when there is an objective indication that the carrying amount may not be recoverable, and if the indication exists, the Group estimates the recoverable amount
(13) Impairment of non-monetary assets

Impairment loss is recognized carrying amount exceeding recoverable amount, recoverable amount is the higher of value in use and net fair value less costs to sell. For impairment testing purposes, assets are allocated to each of the Groups cash-generating units (CGU). Non-monetary assets, except for goodwill impaired, are reviewed in subsequent periods for potential recovery of value and reversal or impairment previously recognized, at the end of each reporting period.
(14) Lease
A lease is classified as a financial lease, if it transfers substantially all the risks and rewards incidental to ownership with the lessee. Assets held under finance leases are initially recognized as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease obligation deducting related financial cost is recognized as a financial lease liability. Interest factor included in financial cost is reflected in comprehensive income statements to achieve a constant rate of interest on the remaining balance of the liability. All other leases are classified as operating leases and are not recognized as an asset in the statement of financial position. Operating lease payments are recognized as expenses amortized over the lease period using the straight-line method after deducting any incentives from the lessor.
(15) Derivative instruments and hedging activities

Derivatives are initially recognized at fair value at the date the derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument. The Group designates certain hedging instrument to: hedge of the exposure to changes in fair value of a recognized asset or liability or an unrecognized firm commitment (fair value hedge); hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge); and hedge of a net investment in a foreign operation. At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item.
FINANCIAL REVIEW
a) Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. Hedge accounting is discontinued when the Company revokes the hedging relationship, when the hedging instrument no longer qualifies for hedge accounting and the fair value adjustment to the carrying amount of the hedged item is amortized to profit or loss from that date to maturity using the effective interest method.
b) Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss. Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognized in profit or loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, or it no longer qualifies for hedge accounting, and any gain or loss accumulated in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in profit or loss. When a forecasted transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.
3) Hedge of a net investment in foreign operations

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in equity while the gain or loss relating to the ineffective portion is recognized immediately in profit or loss. The cumulated gain and loss in other comprehensive income is reclassified from equity to profit or loss on the disposal or partial disposal of the foreign operations.
(16) Non-current assets held for sale group

The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. The Group measures a non-current asset (or disposal group) classified as held for sale at the lower of its carrying amount and fair value less costs to sell.
(17) Compound financial instruments

The component parts of compound financial instruments issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instruments maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity and is not subsequently remeasured. The transaction cost related to the issuance of compound financial instrument is allocated to the liability and equity component proportionately to the amounts issued.
(18) Provisions
The Group recognizes provisions if it has a present or contractual obligations as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and the amount of the obligation is reliably estimated. Provisions are not recognized for future operating losses. The Group recognizes provisions related to the unused portion of point rewards earned by credit card customers, payment guarantees and litigations.
WOORI BANK

Where the Group is required to restore a leased property that is used as a branch, to an agreed condition after the contractual term expires, the present value of expected amounts to be used to dispose, decommission or repair the facilities as an asset retirement obligation. Where there are a number of similar obligations, the probability that an outflow will be required in settlement is determined by considering the obligations as a whole. Although the likelihood of outflow for any one item may be small, if it is probable that some outflow of resources will be needed to settle the obligations as a whole, a provision is recognized. Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the present value of the best estimate of the consideration required to settle the present obligation at the end of the reporting period. The discount rate used in calculating the present value is the pre-tax discount rate taken into accounts the inherent risks and time value of the obligation, in the market. The increase in provisions due to the passage of time is recognized as interest expense.
(19) Equity capital

The Company recognizes common stock as equity and redeemable preferred stocks as a liability. Direct expenses related to the issuance of new shares or options are recognized as a deduction from equity, net of any tax effects. If the Group reacquires its own equity instruments, those instruments (treasury shares) are presented as a deduction from total equity. The gain or loss on the purchase, sale, issue, or cancellation of treasury shares is not recognized in profit or loss but recognized directly in equity.
(20) Financial guarantee contracts

A financial guarantee contract refers to the contract that requires the issuer to pay the specified amounts to reimburse the holder for a loss because the specified debtor fails to make payment when due under original or revised contractual terms of debt instruments. The financial guarantee contract is measured on initial recognition at the fair value, and the fair value is amortized over the financial guarantee contractual term. After initial recognition, financial guarantee contract is measured at the higher of: the present value of expected payment amount due to the financial guarantee contract initially recognized amount of financial guarantee contract less recognized accumulated amortization in accordance with K-IFRS 1018 Revenue.
(21) Interest income and expense recognition

The Group recognizes interest income and expenses from HTM financial assets measured at amortized cost, loans and receivables, and other financial liabilities on an accrual basis using the effective interest method. Effective interest method is the method of calculating the amortized cost of financial assets or liabilities and allocating the interest income or expense over the relevant period. The effective interest rate reconciles the expected future cash in and out through the expected life of financial instruments or shorter period if appropriate, and net carrying value of financial assets or liabilities. When calculating the effective interest rate, the group estimates future cash flows considering all contractual terms of the financial instruments such as prepayment option, except the loss on future credit risk. Also, effective interest rate calculation reflects commission, points (only responsible for the effective interest rate) that are paid or earned between contracting parties, transaction costs, and other premiums and discounts.
(22) Dividends
Dividends are recognized as liabilities during in the month it is approved by the shareholder.
FINANCIAL REVIEW
(23) Employee benefits 1) Short-term employee benefits

The Group recognizes the undiscounted amount of short-term employee benefits expecting payment in exchange for the services when the employee renders services. The Group, also, recognizes relevant liabilities and expenses for the accumulating compensated absence when the services that increase the future paid-leave right are rendered. Expenses and liabilities for the accumulated absence are also recognized in the consideration for constructive obligation when the Group pays a bonus.
2) Retirement benefits
The Group offers a wide variety of retirement benefit plans and, in general, it raises the amounts computed based on actuarial assumptions through the payment regarding additional fund in which the insurance company or fiduciary manages. The Group operates both defined benefit and defined contribution plans. The defined contribution plan is the retirement benefit plans that pay the fixed amount of bonus to other fund organizations. The Group does not have any legal or constructive obligations to make further payment even if it does not pay all employee benefits relating to employee service rendered to the Group in the current and prior periods. For defined benefit plans, the liability recognized in the statement of financial position is the present value of the current dened benet obligation at the date of the statement of financial position, less the fair value of plan assets, adjusted for unrecognized past service cost. The dened benet obligation is calculated on an annual basis by independent actuaries according to the projected unit credit method. The present value of defined benefit obligations is expressed in a currency in which retirement benefits will be paid and is calculated by discounting expected future cash outflows with the interest rate of high quality corporate bonds which maturity is similar to the payment date of retirement benefit obligations. Actuarial gains and losses arising from the difference between changes in actuarial assumptions and what has actually occurred are recognized in profit or loss in the period in which they occur. Past service cost is reflected immediately in profit or loss. However, past service cost is recognized as an expense on a straight-line basis over the vesting period when changes in retirement pension plan continues to require employees to remain on work duties during the vesting period. Being connected to defined contribution plans, the Group mandatorily, contractually, or voluntarily pays contributions to pension insurance plans, which are managed publicly or privately. The Group has no payment obligations after contributions are paid. Contributions are recognized as employee benefit expense at a due date for payment. Prepaid contributions are recognized a decrease in future payment due to the excessive contributions or available refund as assets.
3) Termination benefits
Termination benefits are paid when employment is terminated by the Group before the normal retirement date or an employee accepts voluntary retirement in exchange for benefits. The Group recognizes termination benefits when employment is terminated based on detailed formal plans or voluntary retirement is encouraged, providing termination benefits. Termination benefits are discounted at present value when they are due more than 12 months after the reporting date.
4) Profit-sharing and bonus plan

The Group recognizes appropriate provisions and expenses considering profits related shareholders of the Group after adjusting a specific sum of amounts. The Group recognizes contractual obligations and obligations as a result of a past practice as provisions.
WOORI BANK

(24) Income tax expense

Income tax comprises current tax and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized in other comprehensive income or directly in equity. Current tax expenses are calculated based on the basis of tax laws that have been enacted by the reporting date or substantively enacted in the countries where the Group operates and generates taxable income. Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. However, the Company does not recognize deferred tax arising on the initial recognition of an asset or a liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred taxes are determined using tax rates and laws that have been enacted by the reporting date the date when the relevant deferred tax assets are realized and the deferred tax liabilities are settled or substantially enacted. Deferred income tax assets are recognized if future taxable profits are probable so that the temporary differences can be used. Deferred income tax liabilities are provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention either to settle the balances on a net basis or to realize the asset and settle the liability simultaneously.
(25) Origination fees and costs

The commission, which is part of the effective interest rate of loans, is accounted for deferred origination fees. Incremental cost related to the acquisition or disposal is accounted for deferred origination costs, and it is amortized on the effective interest method and included in interest revenues on loans.
(26) Loan sales

When the Group disposes of loans based on valuations performed by a third party independent specialist (institution) using a reasonable and rational method, the difference between the book value and the selling price is recognized as disposal gains and losses.
(27) Earnings per share (EPS)

Basic earnings per share is calculated by dividing net income from the statement of comprehensive income by the number of outstanding common shares, and diluted EPS is calculated by adjusting earnings and number of shares for the effects of all dilutive potential common shares.
(28) Accounting developments

The Group has not applied the following new and revised K-IFRS that have been issued but are not yet effective: Amendments to K-IFRS 1107 Disclosures Transfers of Financial Assets The amendments to K-IFRS 1107 increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. It will be applied for annual periods beginning on or after July 1, 2011.
FINANCIAL REVIEW
Amendments to K-IFRS 1012 Deferred Tax Recovery of Underlying Assets Under the amendments, investment properties that are measured using the fair value model in accordance with K-IFRS 1040 Investment Property and property and equipment that are measured using revaluation model in accordance with K-IFRS 1016 Property, plant and equipment are presumed to be recovered through sale for the purposes of measuring deferred taxes, unless the presumption is rebutted in certain circumstances. It will be applied for annual periods beginning on or after January 1, 2011. Amendments to K-IFRS 1019 Employee Benefits The amendments to K-IFRS 1019 change the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets when they occur, and hence eliminate the corridor approach permitted under the previous version of K-IFRS 1019 and accelerate the recognition of past service costs. The amendments to K-IFRS 1019 are effective for annual periods beginning on or after January 1, 2013. Legislation of K-IFRS 1113 Fair Value Measurement K-IFRS 1113 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. K-IFRS 1113 is effective for annual periods beginning on or after January 1, 2013, with earlier application permitted. The Group anticipates that the amendments listed above may not have significant impact on the Groups consolidated financial statements.
(29) Others 1) Reclassification of gains (losses) on beneficiary certificates

For the year ended December 31, 2010 and the six months ended June 30, 2011, the Bank had classified its dividends from beneficiary certificates and gains (losses) on disposal of beneficiary certificates as other interest income on beneficiary certificates. Subsequent to the period, the Bank changed its classification for the dividends to dividend income on beneficiary certificates and gains (losses) on disposal of beneficiary certificates to and gains (losses) of disposal of AFS, respectively. The effects of change for the years ended December 31, 2010 and for the six months ended June 30, 2011 are as follows (Korean Won in millions): 2011 Three months ended March 31 Net interest income Dividend income Gain (loss) on AFS financial assets \ (28,759) 2,139 26,620 Six months ended June 30 \ (85,151) 11,352 73,799 2010 Three months ended March 31 \ (35,635) 4,484 31,151 Six months ended June 30 \ (91,232) 19,299 71,933
As a result of the reclassification as discussed above, the Bank retroactively adjusted the financial statements for the prior period and such reclassification did not have an effect on net assets and net income of the Bank.
2) Impairment loss on Kumho Industrial Co., Ltd.

According to the previous GAAP (K-GAAP), Statements of Korean Accounting Standards No. 2 Interim Financial Reporting, the impairment loss on financial assets should be recognized on a cumulative basis when the fair value of the investment is decreased more than 30 percent of the acquisition cost. During the 2010 interim period, \33,083 million of impairment loss on the investment in Kumho Industrial Co., Ltd. was recognized due to
WOORI BANK

the decrease in its fair value more than 30 percent of the acquisition cost. The impairment loss recognized during the interim period was reversed for the year ended December 31, 2010 due to the increase in the fair value of Kumho Industrial Co., Ltd. in a subsequent period in accordance with the previous GAAP. Based on K-IFRS adopted from the fiscal year beginning on January 1, 2010, the impairment losses on AFS financial assets recognized during the interim period cannot be reassessed on a cumulative basis. As such, the impairment loss on the financial assets recognized during the interim period due to the decrease in fair value of the AFS financial assets should not be reversed through profit or loss when the fair value of the AFS financial assets is increased subsequently. The impairment losses amounting to any increase in the fair value of the AFS financial assets in a subsequent period should be recognized as other comprehensive income.
3) Reclassification of due from banks in foreign currencies

The Bank loaned to Woori Bank China (Limited) during January 2011 and recognized the loan as due from banks in foreign currencies as of March 31, 2011 and June 30, 2011, respectively. As of September 31, 2011, the Bank reclassifies the loans from to inter-bank loans in foreign currencies. The effects of change as of March 31 and June 30, 2011 are as follows (Korean Won in millions): 2011 As of March 31 Decrease in due from banks Increase in inter-bank loans \ (22,144) 22,144 As of June 30 \ (86,248) 86,248
As a result of reclassification, the Bank retroactively adjusted the financial statements for the prior period and such reclassification did not have an effect on net assets and net income of the Bank.
4) Change in the recognition of gains (losses) on transactions of derivatives

As for the application of K-GAAP, the Bank recorded gains (losses) on transactions of derivatives that for the year ended December 31, 2010, the Bank recognized gains (losses) on transactions of derivatives such as interest swap, currency swap and commodity swap based on the gross amount of the assets (liabilities) and the settlement amount, respectively. The Bank changed its recognition of gains (losses) on such transactions based on the net of the assets (liabilities) and settlement amount. The effects of change for the years ended December 31, 2010 under K-GAAP are as follows (Korean Won in millions): 2010 Three months ended March 31 Decrease in gains on transactions of derivatives Decrease in losses on transactions of derivatives \ (71,321) (71,321) Six months ended June 30 \ (120,273) (120,273) Nine months ended September 30 \ (208,800) (208,800) The year ended December 31 \ (262,991) (262,991)
As a result of the changes as discussed above, such changes did not have an effect on net assets and net income of the Bank for the year ended December 31, 2010. Also, as for the application of credit default swap under K-GAAP, the Bank recorded gains (losses) on transactions of derivatives with total amount of
FINANCIAL REVIEW
assets (liabilities) and settlement amount, respectively. But for the nine months ended September 31, 2010, the Bank changed its recoding with the net amount of assets (liabilities) and settlement amount. The effects of change for the three months and six months ended June 30, 2010 are as follows (Korean Won in millions): 2010 Three months ended March 31 Decrease in gains on transactions of derivatives Decrease in losses on transactions of derivatives \ (86,007) (86,007) Six months ended June 30 \ (176,018) (176,018)
As a result of the changes as discussed above, such changes did not have an effect on net assets and net income of the Bank for the three months ended March 31, 2010 and six months ended June 30, 2010, respectively.
3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

The significant accounting estimates and assumptions are continually evaluated and are based on historical experience and various factors including expectations of future events that are considered to be reasonable. Actual results can differ from those estimates based on such definitions. The following are the accounting estimates and assumptions that have a significant risk of causing changes to the carrying amounts of assets and liabilities within the next accounting period.
(1) Impairment of goodwill

The Group performs impairment test of goodwill annually or more frequently when there is indication that a CGU may be impaired. Determining whether goodwill is impaired requires an estimation of the value in use of the CGU to which goodwill has been allocated. The value in use calculation requires the Groups management to estimate the future cash flows expected to arise from the CGU and a suitable discount rate in order to calculate present value.
(2) Fair value of financial instruments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgment to select a variety of valuation techniques and make assumptions based on market conditions existing at the end of each reporting period.
(3) Impairment loss on financial assets

The Company individually recognizes an impairment loss on financial assets by assessing the occurrence of loss events or it assesses impairment for a group of financial assets with similar credit risk characteristics. Impairment loss for financial assets is the difference between such assets carrying value and the present value of estimated recoverable cash flows. The estimation of future cash flows requires management judgment.
4. RISK MANAGEMENT
The Groups operating activity is exposed to various financial risks; hence, the Group is required to analyze and assess the level of complex risks, determine the level of risks to be accepted, or to manage the risks.
WOORI BANK

The Groups risk management procedure is set for improvement in the quality of assets held and investments by making a decision about how to avoid or mitigate risks through the identification of the cause of the potential risk and its scope. The Group takes the approach to minimize the risk and maximize the profit by managing the risks acceptable to the Group and eliminating the excessive risks of financial instruments. For this, the following procedures are performed: risk recognition, measurement and assessment, control, and monitoring and reporting. The risk is managed by the risk management department based on the Groups policy. The Risk Management Committee of the Group makes the decision on the risk strategy such as allocation of risk assets and limit settlement.
(1) Credit risk

Credit risk represents the possibility of financial losses incurred when the counterparty fails to fulfill its contractual obligations. The goal of credit risk management is to maintain the credit risk exposure to a permissible degree and to optimize the rate of return considering such credit risk.
1) Credit risk management

The Group considers the probability of failure in performing the obligation of its counterparties, credit exposure to the counterparty and the related default risk and the rate of default loss. The Group uses the credit rating model to assess the possibility of counterpartys default risk; and when assessing the obligors credit grade, the Group utilizes credit grades derived using statistical methods.
2) Credit line management

In order to manage credit risk limit, the Group establishes the appropriate credit line per obligor, company or industry and monitors obligors credit line, total exposures and loan portfolios when approving the loan.
3) Credit risk mitigation

The Group mitigates credit risk resulting from the obligors credit condition by using financial and physical collateral, guarantees, netting agreements and credit derivatives. The Group has adopted the entrapment method acknowledged by BASEL II standards to mitigate its credit risk. Credit risk mitigation is reflected in qualifying financial collateral, trade receivables, guarantees, residential and commercial real estate and other collaterals. The Group regularly performs a revaluation of collateral reflecting such credit risk mitigation.
4) Maximum exposure to credit risk

The maximum exposures of financial instruments, excluding equity securities, to credit risk are as follows (Korean Won in millions): December 31, 2011 Government Banks Loans and receivables Corporation Consumer Sub-total Short-term debt securities (*1) Financial assets at FVTPL Derivative assets Sub-total \ 12,650,614 9,396,031 86,794,609 83,067,778 191,909,032 7,674,574 3,360,383 11,034,957 December 31, 2010 \ 9,109,902 7,560,519 82,254,643 78,705,811 177,630,875 7,438,099 3,469,084 10,907,183 January 1, 2010 \ 6,741,707 9,585,034 83,550,636 76,971,957 176,849,334 8,079,782 3,941,265 12,021,047
FINANCIAL REVIEW
December 31, 2011 AFS financial assets HTM financial assets Derivative assets AFS debt securities (*1) HTM debt securities Derivative assets Guarantees Off-balance Loan commitments Sub-total Total \ 9,142,566 15,400,425 326,413 22,516,325 84,708,979 107,225,304 335,038,697 \
December 31, 2010 9,599,710 15,920,317 133,224 23,451,380 79,895,333 103,346,713 317,538,022 \
January 1, 2010 6,938,399 12,527,029 107,508 24,510,729 74,519,965 99,030,694 307,474,011
(*1) Financial assets at FVTPL and AFS financial assets represents debt securities amount only (Notes 7 and 8).
5) Credit risk of loans and receivables

The credit risk of loans and receivables by loan conditions are as follows (Unit: Korean Won in millions): December 31, 2011 Korean treasury and government agencies Loans neither overdue nor impaired Loans overdue but not impaired Impaired loans Gross loans Provisions for credit losses Total, net \ 12,653,490 313 12,653,803 3,189 \ 12,650,614 Banks \ 9,405,494 3,492 9,408,986 12,955 \ 9,396,031 Business \ 86,861,873 158,049 2,693,687 89,713,609 2,919,000 \ 86,794,609 Consumers \ 81,848,111 1,116,066 519,856 83,484,033 416,255 \ 83,067,778 Total \ 190,768,968 1,277,920 3,213,543 195,260,431 3,351,399 \ 191,909,032
December 31, 2010 Korean treasury and government agencies Loans neither overdue nor impaired Loans overdue but not impaired Impaired loans Gross loans Provisions for Total, net credit losses \ 9,112,178 832 88 9,113,098 3,196 \ 9,109,902 Banks \ 7,586,792 852 1,084 7,588,728 28,209 \ 7,560,519 Business \ 80,115,573 146,458 5,741,155 86,003,186 3,748,543 \ 82,254,643 Consumers \ 77,808,107 893,817 395,211 79,097,135 391,324 \ 78,705,811 Total \ 174,622,650 1,041,959 6,137,538 181,802,147 4,171,272 \ 177,630,875
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January 1, 2010 Korean treasury and government agencies Loans neither overdue nor impaired Loans overdue but not impaired Impaired loans Gross loans Provisions for credit losses Total, net \ 6,751,129 312 6,751,441 9,734 \ 6,741,707 Banks \ 9,608,269 1,690 9,609,959 24,925 \ 9,585,034 Business \ 83,263,072 194,478 2,871,941 86,329,491 2,778,855 \ 83,550,636 Consumers \ 75,990,986 990,086 363,199 77,344,271 372,314 \ 76,971,957 Total \ 175,613,456 1,186,566 3,235,140 180,035,162 3,185,828 \ 176,849,334
a) Credit quality of loans and receivables

The Group manages its loans and receivables that are neither overdue nor impaired through an internal rating system. The value of collateral held is the collateral-allocated amount used when calculating the respective provisions for credit losses. Segregation of credit quality is as follows (Unit: Korean Won in millions): <December 31, 2011> Korean treasury and government agencies Investment grade (*1) Non-investment grade (*2) Total Value of collateral \ 12,649,787 514 \ 12,650,301 \ Corporates General business \ 36,594,727 16,175,665 \ 52,770,392 \ 17,368,373 Small and medium sized enterprise \ 6,147,829 19,905,531 \ 26,053,360 \ 19,747,568 Project financing \ 3,263,526 3,437,740 \ 6,701,266 \ 1,455,022
Banks \ 9,367,466 25,075 \ 9,392,541 \ 524,238
Sub-total \ 46,006,082 39,518,936 \ 85,525,018 \ 38,570,963
Consumers \ 74,847,192 6,826,818 \ 81,674,010 \ 64,830,655
Total \ 142,870,527 46,371,343 \ 189,241,870 \ 103,925,856
<December 31, 2010> Korean treasury and government agencies Investment grade (*1) Non-investment grade (*2) Total Value of collateral \ 9,108,483 582 \ 9,109,065 \ 125 Corporates General business \ 28,209,022 18,488,052 \ 46,697,074 \ 15,608,051 Small and medium sized enterprise \ 4,788,600 20,016,304 \ 24,804,904 \ 19,231,970 Project financing \ 2,783,096 4,659,331 \ 7,442,427 \ 1,348,915
Banks \ 7,554,243 4,424 \ 7,558,667 \ 371,473
Sub-total \ 35,780,718 43,163,687 \ 78,944,405 \ 36,188,936
Consumers \ 70,755,792 6,897,380 \ 77,653,172 \ 59,004,537
Total \ 123,199,236 50,066,073 \ 173,265,309 \ 95,565,071
FINANCIAL REVIEW
<January 1, 2010> Korean treasury and government agencies Investment grade (*1) Non-investment grade (*2) Total Value of collateral \ 6,741,059 337 \ 6,741,396 \ 36,500 Corporates General business \ 27,668,143 19,497,070 \ 47,165,213 \ 16,136,757 Small and medium sized enterprise \ 4,039,973 19,656,877 \ 23,696,850 \ 18,227,777 Project financing \ 2,655,260 8,236,877 \ 10,892,137 \ 1,336,168
Banks \ 9,582,655 693 \ 9,583,348 \ 273,989
Sub-total \ 34,363,376 47,390,824 \ 81,754,200 \ 35,700,702
Consumers \ 68,876,901 6,948,264 \ 75,825,165 \ 57,081,271
Total \ 119,563,991 54,340,118 \ 173,904,109 \ 93,092,462
The Group recognized an provision for credit losses, for loans and receivables neither overdue nor impaired, in the amount of \1,527,098 million, \1,357,341 million and \1,709,347 million as of December 31, 2011, 2010 and January 1, 2010, respectively, which is deducted from the loans and receivables that are neither overdue nor impaired.
(*1) Classified from AAA to BBB for corporates, from level 1 to level 6 for consumers by the internal credit rating (*2) Classified from BBB- to C for corporates, from level 7 to level 10 for consumers by the internal credit rating
b) Aging analysis of loans and receivables

Aging analysis of loans and receivables that are overdue but not impaired are as follows: The value of collateral held is the collateral-allocated amount used when calculating the respective provisions for credit losses (Unit: Korean Won in millions). <December 31, 2010> Korean treasury and government agencies \ 313 \ 313 \Corporates General business \ 38,983 1,636 812 \ 41,431 \ 4,118 Small & medium sized enterprise \ 77,174 18,508 7,162 \ 102,844 \ 80,451 Project financing \ 7,708 \ 7,708 \-
Overdue Less than 30 days 30 to 60 days 60 to 90 days Total Value of collateral
Banks \ 3,490 \ 3,490 \-
Sub-total \ 123,865 20,144 7,974 \ 151,983 \ 84,569
Consumers \ 892,779 98,343 59,339 \ 1,050,461 \ 789,797
Total \ 1,020,447 118,487 67,313 \ 1,206,247 \ 874,366
<December 31, 2010> Korean treasury and government agencies \ 832 Corporates General business \ 39,270 12,935 11,795 Small & medium sized enterprise \ 53,172 20,745 2,294 Project financing \-
Overdue Less than 30 days 30 to 60 days 60 to 90 days
Banks \ 852 -
Sub-total \ 92,442 33,680 14,089
Consumers \ 749,339 64,920 32,966
Total \ 843,465 98,600 47,055
WOORI BANK

<December 31, 2010> Korean treasury and government agencies \ 832 \ Corporates General business \ 64,000 \ 29,012 Small & medium sized enterprise \ 76,211 \ 57,039 Project financing \\-
Overdue Total Value of collateral
Banks \ 852 \-
Sub-total \ 140,211 \ 86,051
Consumers \ 847,225 \ 623,956
Total \ 989,120 \ 710,007
<January 1, 2010> Korean treasury and government agencies \ 311 \ 311 \Corporates General business \ 84,310 10,721 8,243 \ 103,274 \ 15,855 Small & medium sized enterprise \ 64,126 13,537 6,202 \ 83,865 \ 59,891 Project financing \\\-
Overdue Less than 30 days 30 to 60 days 60 to 90 days Total Value of collateral

Banks \ 1,686 \ 1,686 \-
Sub-total \ 148,436 24,258 14,445 \ 187,139 \ 75,746
Consumers \ 827,460 61,806 46,707 \ 935,973 \ 668,977
Total \ 977,893 86,064 61,152 \ 1,125,109 \ 744,723
The Group recognized an provisions for credit losses, for loans and receivables that are overdue but not impaired, in the amount of \71,673 million, \52,839 million and \61,457 as of December 31, 2011, 2010 and January 1, 2010, respectively, which is deducted from the loans and receivables that are overdue but not impaired.
c) Individually impaired loans and receivables

Impaired loans and receivables are as follows (Unit: Korean Won in millions): The collateral value held is the collateral-allocated amount used when calculating the respective provision for loan loss. <December 31, 2011> Korean treasury and government agencies Impaired loans Value of collateral <December 31, 2010> Korean treasury and government agencies Impaired loans Value of collateral \5 Corporates General business \ 1,793,220 1,187,911 Small & medium sized enterprise \ 342,096 379,464 Project financing \ 1,034,711 110,374 \Corporates General business \ 618,177 508,596 Small & medium sized enterprise \ 393,998 485,296 Project financing \ 105,433 60,000
Banks \-
Sub-total \ 1,117,608 1,053,892
Consumers \ 343,307 341,576
Total \ 1,460,915 1,395,468
Banks \ 1,000 1,083
Sub-total \ 3,170,027 1,677,749
Consumers \ 205,414 195,998
Total \ 3,376,446 1,874,830
FINANCIAL REVIEW
<January 1, 2010> Korean treasury and government agencies Impaired loans Value of collateral \Corporates General business \ 1,129,697 614,356 Small & medium sized enterprise \ 320,516 356,803 Project financing \ 159,084 25,872
Banks \-
Sub-total \ 1,609,297 997,031
Consumers \ 210,819 177,760
Total \ 1,820,116 1,174,791
The Group recognized an provision for credit losses, for impaired loans and receivables, in the amount of \1,752,628 million, \2,761,092 million and \1,415,024 as of December 31, 2011, 2010 and January 1, 2010, respectively, which is deducted from the impaired loans and receivables.
6) Credit quality of debt securities

The Group manages debt securities based on the external credit rating. Credit soundness of debt securities on the basis of External Credit Assessment Institution (ECAI)s rating is as follows (Unit: Korean Won in millions): December 31, 2011 Held for trading AAA AA- ~ AA+ BBB- ~ A+ Total \ 3,218,329 4,240,423 215,822 \ 7,674,574 Other at FVTPL \\ AFS securities \ 7,539,168 703,079 900,319 \ 9,142,566 HTM securities \ 14,976,828 322,592 101,005 \ 15,400,425 Total \ 25,734,325 5,266,094 1,217,146 \ 32,217,565
December 31, 2010 Held for trading AAA AA- ~ AA+ BBB- ~ A+ Default grade Total \ 2,242,260 4,379,299 816,540 \ 7,438,099 Other at FVTPL \\ AFS securities \ 7,103,144 795,345 1,701,221 \ 9,599,710 January 1, 2010 Held for trading AAA AA- ~ AA+ BBB- ~ A+ Total \ 2,726,093 4,780,479 480,783 \ 7,987,355 Other at FVTPL \92,427 \ 92,427 AFS securities \ 4,834,646 336,760 1,766,993 \ 6,938,399 HTM securities \ 11,794,330 275,805 456,894 \ 12,527,029 Total \ 19,355,069 5,393,044 2,797,097 \ 27,545,210 HTM securities \ 14,859,515 298,658 762,139 5 \ 15,920,317 Total \ 24,204,919 5,473,302 3,279,900 5 \ 32,958,126
(*) Held for trading, other at FVTPL and AFS represents debt securities amount only (Notes 7 and 8).
WOORI BANK

7) Geographical and industrial distribution of credit risk a) Geographical distribution of credit risk
The geographical distribution of credit risk of financial asset is as follows (Unit: Korean Won in millions): December 31, 2011 Korea Korean treasury and government agencies Loans and receivables Banks Corporates Consumers Sub-total Financial assets at FVTPL AFS financial assets HTM financial assets
USA \263,478 671,006 778,639 1,713,123 -
UK \377,874 433,509 16 811,399 -
Japan \10,311 492,721 32,022 535,054 -
China \581,424 1,696,539 1,844 2,279,807 -
Others \1,687,955 2,428,124 8,530 4,124,609 -
Total \ 12,650,614 9,396,031 86,794,609 83,067,778 191,909,032 7,674,574
\ 12,650,614 6,474,989 81,072,710 82,246,727 182,445,040 7,674,574
Short-term debt securities AFS debt securities HTM debt securities Guarantee
9,012,716
81,030
34,035
14,785
9,142,566
15,297,458 20,540,769 84,033,075 104,573,844 \ 319,003,632
1,967 210,345 5,597 215,942 \ 2,012,062
108,222 108,222 \ 919,621
51,742 19,488 71,230 \ 606,284
1,817 181,996 450,194 632,190 \ 2,947,849
99,183 1,423,251 200,625 1,623,876 \ 5,862,453
15,400,425 22,516,325 84,708,979 107,225,304 \ 331,351,901
Off-balance
Loan commitments Sub-total
Total
December 31, 2010 Korea Korean treasury and government agencies Loans and receivables Banks Corporates Consumers Sub-total Financial assets at FVTPL AFS financial assets Short-term debt securities AFS debt securities \ 9,109,902 5,695,968 76,222,064 77,677,166 168,705,100 7,438,099 USA \418,506 788,743 819,831 2,027,080 UK \152,105 537,516 6 689,627 Japan \4,505 536,438 27,924 568,867 China \384,714 1,575,885 3,099 1,963,698 Others \904,721 2,593,997 177,785 3,676,503 Total \ 9,109,902 7,560,519 82,254,643 78,705,811 177,630,875 7,438,099
9,465,409
108,872
15,503
9,926
9,599,710
FINANCIAL REVIEW
December 31, 2010 Korea HTM financial assets HTM debt securities Guarantee Off-balance Loan commitments Sub-total Total 15,800,202 22,478,664 79,385,050 101,863,714 \ 303,272,524 USA 2,262 115,514 56,945 172,459 \ 2,310,673 UK 68,634 68,634 \ 758,261 Japan 48,057 1,593 49,650 \ 618,517 China 164,791 399,126 563,917 \ 2,543,118 Others 117,853 575,720 52,619 628,339 \ 4,432,621 Total 15,920,317 23,451,380 79,895,333 103,346,713 \ 313,935,714
January 1, 2010 Korea Korean treasury and government agencies Loans and receivables Banks Corporates Consumers Sub-total Financial assets at FVTPL AFS financial assets HTM financial assets Short-term debt securities AFS debt securities HTM debt securities Guarantee Off-balance Loan commitments Sub-total Total \ 6,738,784 8,232,638 77,325,048 75,991,702 168,288,172 8,079,782 USA \360,588 888,586 949,142 2,198,316 UK \91,372 741,505 8 832,885 Japan \6,381 496,560 23,548 526,489 China \215,282 1,314,044 3,359 1,532,685 Others \ 2,923 678,774 2,784,892 4,198 3,470,787 Total \ 6,741,707 9,585,035 83,550,635 76,971,957 176,849,334 8,079,782
6,824,593
112,662
1,144
6,938,399
12,405,658 23,631,700 73,972,467 97,604,167 \ 293,202,372
2,809 100,189 16,539 116,728 \ 2,430,515
67,104 67,104 \ 899,989
66,085 30,622 96,707 \ 623,196
106,022 403,782 509,804 \ 2,042,489
118,562 539,629 96,555 636,184 \ 4,226,677
12,527,029 24,510,729 74,519,965 99,030,694 \ 303,425,238
WOORI BANK

b) Industrial distribution of credit risk

The industrial distribution of credit risk of financial asset is as follows (Unit: Korean Won in millions): December 31, 2011 Service Korean treasury and government agencies Banks Loans and receivables Corporates Consumers Sub-total Financial assets at FVTPL AFS securities HTM securities Short-term debt securities AFS debt securities HTM debt securities Guarantee Off-balance
Manufacturing \76,700 35,405,638 1,770,533 37,252,871 76,139 20,436 11,629,194 26,061,884 37,691,078 \ 75,040,524
Others \ 62,664 1,084,822 11,881,955 73,787,311 86,816,752 1,376,156 4,334,963 5,777,505 3,181,644 38,606,744 41,788,388 \ 140,093,764
Total \ 12,650,614 9,396,031 86,794,609 83,067,778 191,909,032 7,674,574 9,142,566 15,400,425 22,516,325 84,708,979 107,225,304 \ 331,351,901
\ 12,587,950 8,234,509 39,507,016 7,509,934 67,839,409 6,222,279 4,787,167 9,622,920 7,705,487 20,040,351 27,745,838 \ 116,217,613
Loan commitments Sub-total
Total
December 31, 2010 Korean treasury and government agencies Banks Loans and receivables Corporates Consumers Sub-total Financial assets at FVTPL AFS securities HTM securities Off-balance Short-term debt securities AFS debt securities HTM debt securities Guarantee Loan commitments Sub-total Total \ 8,472,457 6,623,787 39,759,282 7,711,877 62,567,403 4,885,547 4,855,360 10,587,208 6,441,565 17,019,197 23,460,762 \ 106,356,280 13,209,338 26,677,540 39,886,878 \ 73,390,088 \1,525 31,651,178 1,761,400 33,414,103 69,069 20,038 \ 637,445 935,207 10,844,183 69,232,534 81,649,369 2,483,483 4,724,312 5,333,109 3,800,477 36,198,596 39,999,073 \ 134,189,346 \ 9,109,902 7,560,519 82,254,643 78,705,811 177,630,875 7,438,099 9,599,710 15,920,317 23,451,380 79,895,333 103,346,713 \ 313,935,714
FINANCIAL REVIEW
January 1, 2010 Korean treasury and government agencies Banks Loans and receivables Corporates Consumers Sub-total Financial assets at FVTPL AFS securities HTM securities Off-balance Short-term debt securities AFS debt securities HTM debt securities Guarantee Loan commitments Sub-total Total \ 6,455,102 6,885,865 41,620,308 8,134,534 63,095,809 5,252,006 2,458,968 10,582,299 5,857,017 15,983,277 21,840,294 \ 103,229,376 \69 31,098,082 1,876,931 32,975,082 114,577 57,870 5,758 14,689,322 24,913,962 39,603,284 \ 72,756,571 \ 286,605 2,699,101 10,832,245 66,960,492 80,778,443 2,713,199 4,421,561 1,938,972 3,964,390 33,622,726 37,587,116 \ 127,439,291 \ 6,741,707 9,585,035 83,550,635 76,971,957 176,849,334 8,079,782 6,938,399 12,527,029 24,510,729 74,519,965 99,030,694 \ 303,425,238
(2) Market risk

Market risk is the possible risk of loss arising from trading activities in the volatility of market factors such as interest rates, stock prices, and foreign exchange rates. Market risk occurs as a result of changes in the interest rates and foreign exchange rates for financial instruments that are not yet settled, and all contracts are exposed to a certain level of volatility according to the interest rates, credit spreads, foreign exchange rates and the price of equity securities.
1) Market risk management

For trading activities, the Group avoids, bears or mitigates risks by identifying the underlying source of risks, measuring parameters and evaluating their appropriateness.
2) Market risk measurement

The Group uses both standard-based and internal model-based approach to measure market risk. A standard risk measurement model is used to calculate individual market risk of owned capital while internal risk measurement model is used to calculate general capital market risk and it is used to measure internal risk management measure. The Risk Management Committee allocates owned capital to market risk. The Risk Management department measures the Value at Risk (VaR, maximum losses) limit by department and risk factor and loss limit on a daily basis and reports regularly to the Risk Management committee.
3) Risk Control
At the beginning of each year, the Risk Management Committee establishes the VaR limit, loss limit and risk capital limit for its management purposes. Limit by investment desk/dealer is independently managed to the extent of the limit given to each departments of the Group and the limit by investment and loss cut is managed by risk management personnel with the department.
WOORI BANK

4) Sensitivity analysis of market risk

The Group performs sensitivity analysis for both trading and non-trading activities. For trading activities, the Group uses a VaR model which uses certain assumptions of possible fluctuations in market condition and, by conducting simulations of gains and losses, under which the model estimates the maximum losses that may occur. A VaR model predicts based on statistics of possible losses on the portfolio at a certain period currently or in the future. It indicates the maximum expected loss with at least 99% credibility. In short, there exists a one percent possibility that the actual loss might exceed the predicted loss generated from the VaR's calculation. The actual results are periodically monitored to examine the validity of the assumptions and variables and factors that are used in VaR's calculations. However, this approach cannot prevent the loss when the market fluctuation exceeds expectation. For non-trading activities, interest rate Earning at Risk (EaR) and interest rate VaR, which is based on the simulations of the Net Interest Income (NII) and Net Present Value (NPV), are calculated for the Bank and the risk for all other subsidiaries is measured and managed by the interest rate VaR calculations based on a Gap in interest rate per Bank for International Settlements (BIS) Framework. NII is a profit based indicator for displaying the profit changes in short term due to the short term interest change. It will be estimated as subtracting the interest expenses of liabilities from the interest income of the assets. NPV is an indicator for displaying the risk in economical view according to the unfavorable changes related to the interest rate. It will be estimated as subtracting the present value of liabilities from the present value of the asset. EaR shows the maximum profit-loss amount, which indicates the maximum deduction amount caused by the unfavorable changes related to the interest rate of certain period of time. Interest rate VaR shows the potential maximum loss generated by the unfavorable changes during certain period of present or future.
a) Trading activities
The minimum, maximum and average VaR for the year ended December 31, 2011 and 2010, respectively, and the VaR as of December 31, 2011 and 2010, respectively, are as follows (Unit: Korean Won in millions): For the year ended December 31, 2011 As of December 31, 2011 \ 5,066 2,978 2,745 3 4,402 As of December 31, 2010 \ 3,770 1,518 3,672 13 3,520 For the year ended December 31, 2010
Risk factor Interest rate Stock price Foreign currencies Commodity Total risk
Average \ 5,113 3,947 3,332 134 5,724
Maximum \ 7,471 5,608 6,378 773 9,304
Minimum \ 2,878 1,666 1,307 2 3,331
Average \ 12,321 3,455 8,859 728 6,478
Maximum \ 25,873 10,775 23,970 2,733 19,615
Minimum \ 3,172 1,073 2,260 9 2,817
b) Non-trading activities
The NII and NPV are calculated, respectively, by using the simulation method for the Group and scenario responding to the interest rate (IR) changes are as follows (Korean Won in millions): December 31, 2011 Name of scenario Base case Base case (Prepay) IR 100bp up NII \ 4,847,266 4,854,961 5,059,011 NPV \ 9,959,770 9,888,303 10,024,446 December 31, 2010 NII \ 4,715,011 4,713,325 4,955,261 NPV \ 13,190,185 13,285,006 13,732,678 January 1, 2010 NII \ 4,638,545 4,641,567 4,932,985 NPV \ 8,092,752 8,160,631 8,775,274
FINANCIAL REVIEW
December 31, 2011 Name of scenario IR 100bp down IR 200bp up IR 200bp down IR 300bp up IR 300bp down NII 4,591,374 5,270,755 4,250,407 5,482,498 3,819,860 NPV 9,919,369 10,109,386 9,907,990 10,210,892 9,933,636
December 31, 2010 NII 4,440,066 5,195,521 4,074,044 5,435,778 3,493,958 NPV 12,599,940 14,236,469 11,951,146 14,708,128 11,230,159
January 1, 2010 NII 4,328,327 5,227,779 3,921,553 5,522,205 3,255,417 NPV 7,356,131 9,412,908 6,556,123 10,011,974 5,667,912
The interest rate EaR and the interest rate VaR, calculated, respectively, based on the BIS Framework of the Group excluding the Bank are as follows (Korean Won in millions): December 31, 2011 EaR \ 79,381 VaR \ 22,429 December 31, 2010 EaR \ 66,163 VaR \ 19,443 January 1, 2010 EaR \ 41,777 VaR \ 30,100
5) Other market risk a) Interest rate risk

The Group estimates and manages risks related to changes in interest rate due to the difference in the sensitivity of interest-yielding assets and the sensitivity of liabilities. Cash flows of principal amounts and interests from interest bearing assets and liabilities by repricing date are as follows (Unit: Korean Won in millions): December 31, 2011 Within 3 months Loans and receivables Asset AFS financial assets HTM financial assets Total Deposits due to customers Liability Borrowings Debentures Total \ 136,542,977 1,799,688 3,725,852 142,068,517 92,306,919 12,565,728 4,769,779 \ 109,642,426 3 to 6 months \ 22,852,633 1,261,218 2,526,982 26,640,833 21,104,315 2,050,186 1,258,482 \ 24,412,983 6 to 9 months \ 3,549,445 1,713,060 1,082,027 6,344,532 16,723,313 490,643 1,126,893 \ 18,340,849 9 to 12 months \ 4,514,552 2,759,124 887,506 8,161,182 15,300,748 2,195,221 2,109,096 \ 19,605,065 1 to 5 years \ 8,981,673 4,883,199 8,071,654 21,936,526 20,644,013 2,122,816 11,329,313 \ 34,096,142 5 years ~ \ 5,708,954 422,508 96,229 6,227,691 163,498 681,905 1,264,908 \ 2,110,311 Total \182,150,234 12,838,797 16,390,250 211,379,281 166,242,806 20,106,499 21,858,471 \ 208,207,776
WOORI BANK

December 31, 2010 Within 3 months Loans and receivables Asset AFS financial assets HTM financial assets Total Deposits due to customers Liability Borrowings Debentures Total \ 139,617,197 1,490,824 3,834,126 144,942,147 89,477,077 11,799,149 3,486,354 \ 104,762,580 3 to 6 months \ 16,286,993 2,166,367 244,227 18,697,587 18,759,427 2,237,474 1,160,386 \ 22,157,287 6 to 9 months \ 2,940,288 716,838 946,452 4,603,578 16,981,042 468,668 975,496 \ 18,425,206 9 to 12 months \ 3,362,392 2,189,157 1,931,415 7,482,964 14,767,146 1,212,670 1,911,680 \ 17,891,496 1 to 5 years \ 7,017,360 3,393,975 9,389,487 19,800,822 18,927,037 3,169,692 13,934,944 \ 36,031,673 5 years ~ \ 1,550,453 394,812 77,012 2,022,277 145,878 716,054 3,545,361 \ 4,407,293 Total \ 170,774,683 10,351,973 16,422,719 197,549,375 159,057,607 19,603,707 25,014,221 \ 203,675,535
January 1, 2010 Within 3 months Loans and receivables Asset AFS financial assets HTM financial assets Total Deposits due to customers Liability Borrowings Debentures Total \ 152,265,394 610,065 2,869,598 155,772,057 90,729,160 14,140,641 3,653,381 \ 108,523,182 3 to 6 months \ 11,564,449 526,524 1,128,660 13,219,633 15,003,244 1,744,070 2,938,866 \ 19,686,180 6 to 9 months \ 3,608,939 665,822 741,322 5,016,083 14,015,935 475,926 2,450,880 \ 16,942,741 9 to 12 months \ 3,003,975 1,102,297 2,378,775 6,485,047 14,648,702 890,510 3,253,328 \ 18,792,540 1 to 5 years \ 8,154,664 3,950,741 5,702,059 17,807,464 17,251,437 3,878,257 10,234,597 \ 31,364,291 5 years ~ \ 1,531,267 439,792 67,957 2,039,016 195,505 774,686 2,403,574 \ 3,373,765 Total \180,128,688 7,295,241 12,915,371 200,339,300 151,843,983 21,904,090 24,934,626 \198,682,699
Repricing date is defined as the date which interest rates of operational funds and procuring funds can be re-adjusted before the expiration date. Analysis based on interest expirations is used to analyze assets and liabilities that cause interest margins and interest costs. However, loans and receivable account that are not expected to have interest cash flow due to impairment and other circumstances are excluded from the analysis.
b) Currency risk
Currency risk occurs from the financial instrument denominated in a foreign currency other than the functional currencies. Therefore, no currency risk arises from non-monetary items or financial instruments denominated in the functional currency. Financial instruments in foreign currencies exposed to currency risk are as follows (Unit: USD in millions, JPY in millions, CNY in millions, EUR in millions and Korean Won in millions):
FINANCIAL REVIEW
December 31, 2011 USD Foreign currency Loans and receivables Financial assets at FVTPL Asset AFS financial assets HTM financial assets Total Financial liabilities at FVTPL Deposits Borrowings Liability Debentures Other financial liabilities Total Off-balance sheet items
19,824
JPY Foreign currency

256,803
CNY Foreign currency

9,741
EUR Foreign currency

816
Others Won equivalent

\ 2,126,750
Total Won equivalent

\ 31,801,402
Won equivalent
\ 22,863,396
Won equivalent
\ 3,813,929
Won equivalent
\ 1,777,788
Won equivalent
\ 1,219,539
347
400,498
233
3,467
1,375
405,340
199
229,969
1,102
16,362
186
33,937
15
22,050
36,247
338,565
21 20,391
23,867 \ 23,517,730
258,138
\ 3,833,758
10 9,937
1,812 \ 1,813,537
832
\ 1,242,964
77,288 \ 2,240,285
102,967 \ 32,648,274
424
\ 489,411
1,766
\ 26,226
\-
\ 2,667
\-
\ 518,304
6,090 7,428 3,809 2,440 20,191 12,034
7,023,436 8,567,946 4,392,959 2,814,563 \ 23,288,315 \ 13,878,337
62,491 118,747 50,019 22,429 255,452 31,268
928,091 1,763,584 742,856 333,100 \ 3,793,857 \ 464,379
8,788 4 128 8,920 123
1,603,813 766 23,428 \ 1,628,007 \ 22,451
223 851 370 1,446 641
333,608 1,271,226 552,203 \ 2,159,704 \ 958,219
482,261 344,539 274,503 193,964 \ 1,295,267 \ 595,220
10,371,209 11,948,061 5,410,318 3,917,258 \ 32,165,150 \ 15,918,606
December 31, 2010 USD Foreign currency Loans and receivables Financial assets at FVTPL Asset AFS financial assets HTM financial assets Total
15,402

252,852

9,520

883

\ 1,775,410

\ 25,828,004
Won equivalent
\ 17,540,903
Won equivalent
\ 3,532,546
Won equivalent
\ 1,642,217
Won equivalent
\ 1,336,928
378
430,778
403
5,629
322
436,729
209
247,037
2,030
22,456
90
15,551
13
22,059
49,125
356,228
26 16,015
29,612 \ 18,248,330
255,285
\ 3,560,631
9,610
\ 1,657,768
896
\ 1,359,309
113,925 \ 1,938,460
143,537 \ 26,764,498
WOORI BANK

December 31, 2010 USD Foreign currency Financial liabilities at FVTPL Deposits Borrowings Liability Debentures Other financial liabilities Total Off-balance sheet items
1,518

1,732

-

1

\-

\ 1,751,948
Won equivalent
\ 1,726,729
Won equivalent
\ 24,195
Won equivalent
\-
Won equivalent
\ 1,024
5,158 5,735 3,556 795 16,762 11,537
5,874,575 6,530,943 4,050,173 905,742 \ 19,088,162 \ 13,139,121
45,357 117,647 10,000 11,012 185,748 34,304
633,670 1,643,623 139,708 153,851 \ 2,595,047 \ 479,258
7,200 972 116 8,288 506
1,241,963 167,680 20,046 \ 1,429,689 \ 87,291
156 650 25 832 696
235,560 983,349 37,874 \ 1,257,807 \ 1,053,871
447,999 403,383 258,545 35,495 \ 1,145,422 \ 563,243
8,433,767 9,728,978 4,448,426 1,153,008 \ 25,516,127 \ 15,322,784
January 1, 2010 USD Foreign currency Loans and receivables Financial assets at FVTPL Asset AFS financial assets HTM financial assets Total Financial liabilities at FVTPL Deposits Borrowings Liability Debentures Other financial liabilities Total Off-balance sheet items
16,170
118

255,901

66

857

\ 2,368,389

\ 25,925,877
Won equivalent
\ 18,879,625
Won equivalent
\ 3,231,571
Won equivalent
\ 11,354
Won equivalent
\ 1,434,938
385
449,407
303
3,820
1,810
455,037
423
493,750
4,690
59,225
58
97,649
41,620
692,244
66 17,044 1,925 6,215 7,045 2,958 700 18,843 11,590
77,455 \ 19,900,237 \ 2,247,206 7,256,063 8,225,924 3,453,639 817,293 \ 22,000,125 \ 13,532,836
260,894 1,249 55,032 57,132 10,000 3,272 126,685 40,644
\ 3,294,616 \ 15,776 694,955 721,476 126,282 41,322 \ 1,599,811 \ 513,265
66 -
\ 11,354 \8 \8 \-
916 2 351 201 300 70 924 819
\ 1,534,397 \ 3,869 587,278 336,939 502,284 117,854 \ 1,548,224 \ 1,371,953
120,223 \ 2,530,232 \1,208,371 275,621 180,629 69,440 \ 1,734,061 \ 620,800
197,678 \ 27,270,836 \ 2,266,851 9,746,675 9,559,960 4,262,834 1,045,909 \ 26,882,229 \ 16,038,854
FINANCIAL REVIEW
(3) Liquidity risk

Liquidity risk refers to the risk that the Group may encounter difficulties in meeting obligations from its financial liabilities.
1) Liquidity risk management

Liquidity risk management is to prevent potential cash shortage as a result of mismatching the use of funds (assets) and sources of funds (liabilities) or unexpected cash outflows. Assets and liabilities are grouped by account under Asset Liability Management (ALM) in accordance with the characteristics of the account. The Group manages liquidity risk by identifying maturity gap and such gap ratio through various cash flows analysis (i.e. based on remaining maturity and contract period, etc.); while maintaining the gap ratio at or below the target limit.
2) Maturity analysis of non-derivative financial liabilities a) The Groups maturity analysis of non-derivative financial liabilities, cash flows of principals and interests, by remaining contractual maturities are as follows (Unit: Korean Won in millions):
December 31, 2011 Within 3 months Financial liabilities at FVTPL Deposits due to customers Borrowings Debentures Other financial liabilities Total \ 5,835 96,425,171 11,594,987 3,173,674 10,791,636 \ 121,991,303 3 to 6 months \ 5,898 17,482,780 2,305,798 1,252,085 23,458 \ 21,070,019 6 to 9 months \ 5,900 15,025,139 794,432 1,056,362 \ 16,881,833 9 to 12 months \ 4,330 33,330,322 2,489,316 2,177,705 \ 38,001,673 1 to 5 years \ 210,341 4,871,864 2,748,473 12,693,036 \ 20,523,714 5 years ~ \ 191,757 1,490,642 678,892 1,906,321 3,963,631 \ 8,231,243 Total \ 424,061 168,625,918 20,611,898 22,259,183 14,778,725 \ 226,699,785
December 31, 2010 Within 3 months Financial liabilities at FVTPL Deposits due to customers Borrowings Debentures Other financial liabilities Total \ 6,952 86,725,216 10,302,555 796,579 4,054,238 \ 101,885,540 3 to 6 months \ 38,770 15,543,784 2,863,086 1,163,516 14,342 \ 19,623,498 6 to 9 months \ 7,745 15,828,790 610,201 1,590,615 \ 18,037,351 9 to 12 months \ 38,083 34,299,954 1,485,583 2,030,848 \ 37,854,468 1 to 5 years \ 499,475 6,096,054 3,700,201 15,034,443 73,371 \ 25,403,544 5 years ~ \ 1,375,818 1,585,392 713,096 6,449,049 2,538,276 \ 12,661,631 Total \ 1,966,843 160,079,190 19,674,722 27,065,050 6,680,227 \ 215,466,032
WOORI BANK

January 1, 2010 Within 3 months Financial liabilities at FVTPL Deposits due to customers Borrowings Debentures Other financial liabilities Total \ 11,123 78,737,607 12,565,916 2,039,926 3,428,188 \ 96,782,760 3 to 6 months \ 43,379 12,613,822 2,211,515 3,203,710 \ 18,072,426 6 to 9 months \ 82,028 14,947,508 877,941 2,405,116 58,880 \ 18,371,473 9 to 12 months \ 42,644 39,090,936 972,475 3,725,855 \ 43,831,910 1 to 5 years \ 444,563 6,091,260 4,610,501 10,525,756 \ 21,672,080 5 years ~ \ 1,762,125 1,512,525 769,063 2,324,423 3,066,059 \ 9,434,195 Total \ 2,385,862 152,993,658 22,007,411 24,224,786 6,553,127 \ 208,164,844
Above maturity analysis includes both principal and interest cash flows by contractual maturities.
b) Cash flows of principals and interests by expected maturities of non-derivative financial liabilities are as follows (Unit: Korean Won in millions):
December 31, 2011 Within 3 months Financial liabilities at FVTPL Deposits due to customers Borrowings Debentures Other financial liabilities Total \ 5,835 108,096,621 11,594,987 3,173,674 10,791,636 \ 133,662,753 3 to 6 months \ 5,898 22,148,175 2,305,798 1,252,085 23,458 \ 25,735,414 6 to 9 months \ 5,900 15,420,426 794,432 1,056,362 \ 17,277,120 9 to 12 months \ 4,330 17,086,761 2,489,316 2,177,705 \ 21,758,112 1 to 5 years \ 210,341 4,023,178 2,748,473 12,693,036 \ 19,675,028 5 years ~ \ 191,757 1,132,860 678,892 1,906,321 3,963,631 \ 7,873,461 Total \ 424,061 167,908,021 20,611,898 22,259,183 14,778,725 \ 225,981,888
December 31, 2010 Within 3 months Financial liabilities at FVTPL Deposits due to customers Borrowings Debentures Other financial liabilities Total \ 6,952 106,679,712 10,302,555 796,579 4,054,238 \ 121,840,036 3 to 6 months \ 38,770 20,474,148 2,863,086 1,163,516 14,342 \ 24,553,862 6 to 9 months \ 7,745 13,610,871 610,201 1,590,615 \ 15,819,432 9 to 12 months \ 38,083 13,011,624 1,485,583 2,030,848 \ 16,566,138 1 to 5 years \ 499,475 4,335,968 3,700,201 15,034,443 73,371 \ 23,643,458 5 years ~ \ 1,375,818 1,202,551 713,096 6,449,049 2,538,276 \ 12,278,790 Total \ 1,966,843 159,314,874 19,674,722 27,065,050 6,680,227 \ 214,701,716
FINANCIAL REVIEW
January 1, 2010 Within 3 months Financial liabilities at FVTPL Deposits due to customers Borrowings Debentures Other financial liabilities Total \ 11,123 100,593,806 12,565,916 2,039,926 3,428,188 \ 118,638,959 3 to 6 months \ 43,379 17,976,464 2,211,515 3,203,710 \ 23,435,068 6 to 9 months \ 82,028 13,165,844 877,941 2,405,116 58,880 \ 16,589,809 9 to 12 months \ 42,644 14,966,754 972,475 3,725,855 \ 19,707,728 1 to 5 years \ 444,563 4,252,223 4,610,501 10,525,756 \ 19,833,043 5 years ~ \ 1,762,125 1,215,905 769,063 2,324,423 3,066,059 \ 9,137,575 Total \ 2,385,862 152,170,996 22,007,411 24,224,786 6,553,127 \ 207,342,182
Above maturity analysis includes both principal and interest cash flows by expected maturities.
c) Maturity analysis of derivative financial liabilities is as follows (Unit: Korean Won in millions):
Within 3 months December 31, 2011 December 31, 2010 January 1, 2010 \ 3,185,021 3,208,777 4,056,715 3 to 6 months \ (525) (468) (5,674) 6 to 9 months \ 6,209 3,854 5,803 9 to 12 months \ (678) (802) (2,264) 1 to 5 years \ 16,206 23,500 56,234 5 years ~ \3,411 13,297 Total \ 3,206,233 3,238,272 4,124,111
Derivatives held for trading are not managed by contractual maturity as they are held for trading or redemption before maturity. Therefore, they are included in the within 3 months. Cash flows of derivatives instrument held for fair value hedging or cash flow hedging are estimated by cash inflows and outflows.
d) Maturity analysis of off-balance sheet accounts is as follows (Unit: Korean Won in millions):
Guarantees and loan commitments like guarantees for debenture issuance and guarantees for loans which are financial guarantee provided by the Group has expiration dates. However, in case of request of transaction counterparty, the Group will carry out a payment immediately. Details of offbalance sheet items are as follows (Unit: Korea Won in millions): December 31, 2011 Guarantees Loan commitments The above amounts are stated at gross of related provisions. \ 22,516,325 84,708,979 December 31, 2010 \ 23,451,380 79,895,333 January 1, 2010 \ 24,510,729 74,519,965
(4) Operational risk

The Group defines operational risk as the risk that could cause a negative effect on capital resulting from inadequate internal process, labor work and systematic problem or external factors.
1) Operational risk management
WOORI BANK

The Group has been running the operational risk management system under Basel II . The Group developed advanced measurement approached to quantify required capital for operational risk. This system is used for reinforcement in foreign competitions, reducing the amount of risk capitals, managing the risk, and precaution for any unexpected occasions. This system has been tested by the independent third party, and this system approved by the Financial Supervisory.
2) Operational risk measurement

To quantify required capital for operational risk, the Group applies advanced measurement approach using of internal loss data, business environment and internal control factors and scenario analysis. For the risk management over subsidiaries of the Group, the Group uses the basic indicator approach.
(5) Capital management

The Group follows the capital adequacy standard suggested by the Financial Supervisory. This standard is based on Basel II from 2004, which has been adopted in Korea since 2008. In accordance with banking regulations, the Group is required to maintain a minimum 8% of capital adequacy ratio with high capital risk. According to the Banking supervision by laws enforcement, the entity's capital can be clarified into two kinds. Tier 1 capital (Basic capital): Basic capital consists of the capital, capital surplus, retained earnings, the entity's non-controlling interest (hybrid security included), exchange differences in other accumulated comprehensive incomes. Tier 2 capital (Supplement capital): Supplement capital includes revaluation reserves, gains on valuation of available for sale securities, 45% of share of other comprehensive income on investment in associates, 70% of the existing revaluation gain of fixed assets of the retained earnings, subordinated term debt more than 5 years, the provision for credit losses under banking supervision regulations. Risk Weighted Assets is the Groups assets weighted according to credit risk; errors caused by internal process problems, external occasions and danger of the change in market. The entity calculates risk weighted assets to obey the banking supervisory's detailed enforcement and BIS percentage to predict the equity capital by adding the basic and complementary capital total. The Group makes measures to cope with certain level of loss caused by accumulating the equity capital that is exposed to the risk. The Group is testing and using not only the BIS percentage, which is the minimum regulation standard, but also it is using internal standards. An evaluation on capital adequacy is performed to calculate the gap between available capital and economic capital. In addition, analysis on emergent incidents and additional capital requirements are added and applied. The capital adequacy is evaluated for both supervisory and internal management purpose in accordance with the comparison of unexpected loss and the available capital. If the test result from internal capital adequacy shows lack of available capital, the Group is committed to expanding the equity capital and reinforcement of the risk management. Details of the Groups capital adequacy ratio as of December 31, 2011 based on K-IFRS are as follows (Unit: Korean Won in millions): December 31, 2011 Basic capital Supplement capital Risk weighted assets Capital adequacy ratio \ 15,061,543 4,268,852 19,330,395 140,290,486 13.78%
Details of the Groups capital adequacy ratio as of December 31, 2010 and January 1, 2010 based on K-GAAP are as follows (Unit: Korean Won in
FINANCIAL REVIEW
millions): December 31, 2010 Basic capital Supplement capital Risk weighted assets Capital adequacy ratio \ 15,051,571 4,286,821 19,338,392 131,997,531 14.65% January 1, 2010 \ 14,211,015 5,452,417 19,663,432 136,662,418 14.39%
5. OPERATING SEGMENTS
The Groups reporting segment comprises consumer banking, corporate banking, investment banking, capital market, and headquarters and others. The reportable segments are classified based on the target customer for whom the service is being provided. The details of operating segment are as follows (Unit: Korean Won in millions): December 31, 2011 Consumer banking Assets Liabilities \ 66,573,578 66,410,452 Corporate banking \ 92,128,495 99,911,272 Investment banking \ 8,372,199 94,973 Capital market \ 21,961,041 13,594,388 Headquarters and others \ 57,313,632 45,224,498 Sub-total \ 246,348,945 225,235,583 Inter-segment transaction \ (3,876,783) (889,561) Total \ 242,472,162 224,346,022
December 31, 2010 Consumer banking Assets Liabilities \ 61,978,537 61,965,242 Corporate banking \ 88,524,168 99,554,678 Investment banking \ 8,271,104 106,981 Capital market \ 18,549,009 10,508,096 Headquarters and others \ 53,005,239 39,728,096 Sub-total \ 230,328,057 211,863,093 Inter-segment transaction \ (1,773,194) (795,161) Total \ 228,554,863 211,067,932
January 1, 2010 Consumer banking Assets Liabilities \ 60,511,217 57,397,078 Corporate banking \ 92,126,807 98,976,060 Investment banking \ 8,917,312 332,950 Capital market \ 17,883,261 11,337,944 Headquarters and others \ 50,155,752 44,946,173 Sub-total \ 229,594,349 212,990,205 Inter-segment transaction \ (2,667,008) (2,983,231) Total \ 226,927,341 210,006,974
The components of operating segment are as follows (Unit: Korean Won in millions): For the year ended December 31, 2011 Consumer banking Net interest income: Interest income \ 4,049,332 \ 5,203,936 \ 344,881 \ 505,272 \ 1,584,108 \ 11,687,529 \ (28,271) \ 11,659,258 Corporate banking Investment banking Capital market Headquarters and others Sub-total Inter-segment transaction Total
WOORI BANK

For the year ended December 31, 2011 Consumer banking Interest expense Inter-segment (1,810,688) 63,958 2,302,602 Non-interest income: Non-interest income Non-interest expense Inter-segment 1,669,152 (1,420,772) 12,788 261,168 Other expense: Administrative expense Provisions
Corporate banking (3,147,929) 692,552 2,748,559
Investment banking (11,136) (308,245) 25,500
Capital market (180,297) (316,579) 8,396
Headquarters and others (1,413,599) (119,634) 50,875
Sub-total (6,563,649) 12,052 5,135,932
Inter-segment transaction 629,987 (12,052) 589,664
Total (5,933,662) 5,725,596
2,945,134 (2,528,459) 34,909 451,584
487,772 (480,901) (33,698) (26,827)
6,316,802 (6,205,221) 5,475 117,056
5,397,679 (4,556,095) (19,186) 822,398
16,816,539 (15,191,448) 288 1,625,379
(205,572) 54,272 (288) (151,588)
16,610,967 (15,137,176) 1,473,791
(1,600,340) (146,632) (1,746,972)
(749,681) (707,900) (1,457,581) \ 1,742,562
(20,086) (366,505) (386,591) \ (387,918)
(20,311) (6,159) (26,470) \ 98,982
(58,904) (565,486) (624,390) \ 248,883
(2,449,322) (1,792,682) (4,242,004) \ 2,519,307
(103,471) (170,828) (274,299) \ 163,777
(2,552,793) (1,963,510) (4,516,303) \ 2,683,084
Operating income (loss)
\ 816,798
For the year ended December 31, 2010 Consumer banking Net interest income: Interest income Interest expense Inter-segment \ 3,686,665 (1,684,539) 131,896 2,134,022 Non-interest income: Non-interest income Non-interest expense Inter-segment 1,356,549 (1,108,095) 11,921 260,375 Other expense: Administrative expense Provisions (1,506,939) (125,212) (1,632,151) Operating income (loss) \ 762,246 (701,187) (1,338,427) (2,039,614) \ 1,240,025 (16,551) (156,361) (172,912) \ 23,638 (15,889) (90,706) (106,595) \ 88,296 (22,125) (783,349) (805,474) \ (570,916) (2,262,691) (2,494,055) (4,756,746) \ 1,543,289 (814) (65,931) (66,745) \ (45,660) (2,263,505) (2,559,986) (4,823,491) \ 1,497,629 2,258,624 (1,905,938) 31,967 384,653 680,554 (494,915) (28,758) 156,881 6,694,296 (6,573,805) 3,309 123,800 4,858,524 (4,094,469) (18,641) 745,414 15,848,547 (14,177,222) (202) 1,671,123 399,958 (776,925) 202 (376,765) 16,248,505 (14,954,147) 1,294,358 \ 5,149,892 (3,070,440) 815,534 2,894,986 \ 361,981 (13,863) (308,449) 39,669 \ 451,296 (127,161) (253,044) 71,091 \ 1,470,473 (1,582,582) (398,747) (510,856) \ 11,120,307 (6,478,585) (12,810) 4,628,912 \ (139,259) 524,299 12,810 397,850 \ 10,981,048 (5,954,286) 5,026,762 Corporate banking Investment banking Capital market Headquarters and others Sub-total Inter-segment transaction Total
Information on financial products and services
FINANCIAL REVIEW
The financial products of the Group are classified as interest, non-interest and other goods; however, since this classification has already been reflected in the component of the operating segments above, revenue from external customers is not separately disclosed.
Information on geographical areas

Details of the geographical revenues from external customers and non-current assets are as follows (Unit: Korean Won in millions); Revenues from external customers For the year ended December 31, 2011 Domestic Overseas Total \ 27,435,342 834,883 \ 28,270,225 For the year ended December 31, 2010 \ 26,058,455 1,171,098 \ 27,229,553 December 31, 2011 \ 3,188,702 30,441 \ 3,219,143 Non-current assets December 31, 2010 \ 3,016,128 30,727 \ 3,046,855 January 1, 2010 \ 3,038,050 29,778 \ 3,067,828
Revenues from external customers consist of interest income and non-interest income. Non-current assets consist of investments in associates, investment properties, premises and equipment, and intangible assets.
6. CASH AND CASH EQUIVALENTS

(1) Details of cash and cash equivalents are as follows (Unit: Korean Won in millions):
December 31, 2011 Cash and checks Foreign currencies Demand deposits Fixed deposits Total \ 2,826,040 464,745 1,853,893 244,589 \ 5,389,267 December 31, 2010 \ 2,435,367 387,240 874,775 188,302 \ 3,885,684 January 1, 2010 \ 3,387,396 339,089 1,178,970 134,691 \ 5,040,146
(2) Material transactions not involving cash inflows and outflows are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Changes in other comprehensive income of AFS securities Changes in other comprehensive income of investment in associates Changes in other comprehensive income of overseas business translation Changes in other comprehensive income of cash flow hedge \ (508,346) (28,651) 15,539 8,805 For the year ended December 31, 2010 \ (281,642) (28,532) (16,977) 1,500
WOORI BANK

7. FINANCIAL ASSETS AT FVTPL

(1) Details of financial assets at FVTPL are as follows (Unit: Korean Won in millions):
December 31, 2011 Financial assets held for trading Financial assets designated at FVTPL Total \ 11,317,845 \ 11,317,845 December 31, 2010 \ 11,104,050 \ 11,104,050 January 1, 2010 \ 12,242,418 92,427 \ 12,334,845
(2) Details of financial assets held for trading are as follows (Unit: Korean Won in millions):
December 31, 2011 Securities in local currency: Korean treasury and government agencies Financial institutions Corporates
December 31, 2010
January 1, 2010
\ 588,452 2,653,822 3,977 282,889 2,140,121 19,876 5,689,137
\ 1,161,195 1,304,500 9,515 196,567 300 3,067,997 409,622 6,149,696
\ 2,120,628 684,193 67,729 311,762 2,036 3,624,250 11,261 6,821,859
Equity securities Beneficiary certificates Other securities Loaned securities Sub-total Derivatives instruments assets: Interest rate derivatives Currency derivatives Equity derivatives Commodity derivatives Sub-total Other financial assets (CMA CP) Total
1,422,915 1,867,416 53,706 16,346 3,360,383 2,268,325 \ 11,317,845
1,279,705 2,124,661 39,279 25,439 3,469,084 1,485,270 \ 11,104,050
1,176,100 2,677,650 47,338 40,177 3,941,265 1,479,294 \ 12,242,418
(3) As of January 1, 2010, the Group designated finance debentures in foreign currency with embedded derivatives, which amounted to \81,218 million, as financial assets at FVTPL. Also, the Group has designated other hybrid financial instruments to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise from recognizing assets and liabilities on a different basis.
FINANCIAL REVIEW
8. AFS FINANCIAL ASSETS

(1) Details of AFS financial assets are as follows (Unit: Korean Won in millions):
December 31, 2011 AFS financial assets in local currency: Debt securities: Korean treasury and government agencies Financial institutions Corporates Others Sub-total Equity securities: Listed stock Unlisted stock Capital contributions Beneficiary certificates Sub-total Sub-total AFS financial assets in foreign currencies: Debt securities Equity securities Sub-total Loaned securities Total 199,049 139,516 338,565 80,193 \ 14,670,607 207,041 149,187 356,228 848,494 \ 16,610,090 475,854 216,389 692,243 \ 16,702,454 877,036 747,675 252,002 3,511,812 5,388,525 14,251,849 1,546,560 640,966 209,976 4,463,691 6,861,193 15,405,368 1,560,608 721,282 224,154 7,041,622 9,547,666 16,010,211 \ 2,478,265 3,994,503 2,390,187 369 8,863,324 \ 2,262,008 4,939,624 1,314,616 27,927 8,544,175 \ 2,353,635 2,558,248 1,192,905 357,757 6,462,545 December 31, 2010 January 1, 2010
(2) Details of unrealized gains or losses on AFS financial assets are as follows (Unit: Korean Won in millions):
December 31, 2011 Amortized cost (or cost) AFS financial assets in local currency: Debt securities: Korean treasury and government agencies Financial institutions Corporates Others Sub-total Equity securities: Listed stock 453,618 424,510 (1,092) 877,036 \ 2,447,068 3,983,885 2,384,008 369 8,815,330 \ 31,632 11,145 17,271 60,048 \ (435) (527) (11,092) (12,054) \ 2,478,265 3,994,503 2,390,187 369 8,863,324 Gross unrealized gains Gross unrealized losses Fair value
WOORI BANK

December 31, 2011 Amortized cost (or cost) Unlisted stock Capital contributions Beneficiary certificates Sub-total Sub-total AFS financial assets in foreign currencies: Debt securities Equity securities Sub-total Loaned securities Total
128
Gross unrealized gains 154,592 6,219 70,705 656,026 716,074
Gross unrealized losses (3,994) (6,892) (2,582) (14,560) (26,614)
Fair value 747,675 252,002 3,511,812 5,388,525 14,251,849
597,077 252,675 3,443,689 4,747,059 13,562,389
199,079 111,639 310,718 79,990 \ 13,953,097
117 32,498 32,615 203 \ 748,892
(147) (4,621) (4,768) \ (31,382)
199,049 139,516 338,565 80,193 \ 14,670,607
December 31, 2010 Amortized cost (or cost) AFS financial assets in local currency: Debt securities: Korean treasury and government agencies Financial institutions Corporates Others Sub-total Equity securities: Listed stock Unlisted stock Capital contributions Beneficiary certificates Sub-total Sub-total AFS financial assets in foreign currencies: Debt securities Equity securities Sub-total Loaned securities Total 199,386 137,705 337,091 845,230 \ 15,409,856 8,481 21,020 29,501 4,992 \ 1,250,285 (826) (9,538) (10,364) (1,728) \ (50,051) 207,041 149,187 356,228 848,494 \ 16,610,090 675,838 510,242 226,345 4,336,442 5,748,867 14,227,535 880,747 134,693 3,977 129,433 1,148,850 1,215,792 (10,025) (3,969) (20,346) (2,184) (36,524) (37,959) 1,546,560 640,966 209,976 4,463,691 6,861,193 15,405,368 \ 2,228,919 4,924,813 1,297,009 27,927 8,478,668 \ 33,325 15,732 17,885 66,942 \ (236) (921) (278) (1,435) \ 2,262,008 4,939,624 1,314,616 27,927 8,544,175 Gross unrealized gains Gross unrealized losses Fair value
FINANCIAL REVIEW
January 1, 2010 Amortized cost (or cost) AFS financial assets in local currency: Debt securities: Korean treasury and government agencies Financial institutions Corporates Others Sub-total Equity securities: Listed stock Unlisted stock Capital contributions Beneficiary certificates Sub-total Sub-total AFS financial assets in foreign currencies: Debt securities Equity securities Sub-total Total 480,385 188,749 669,134 \ 15,216,029 2,802 55,396 58,198 \ 1,574,218 (7,333) (27,756) (35,089) \ (87,793) 475,854 216,389 692,243 \ 16,702,454 274,902 604,622 237,431 6,967,750 8,084,705 14,546,895 1,288,181 119,354 2,223 86,610 1,496,368 1,516,020 (2,475) (2,694) (15,500) (12,738) (33,407) (52,704) 1,560,608 721,282 224,154 7,041,622 9,547,666 16,010,211 \ 2,363,561 2,550,631 1,191,870 356,128 6,462,190 \ 4,083 11,263 1,814 2,492 19,652 \ (14,009) (3,646) (779) (863) (19,297) \ 2,353,635 2,558,248 1,192,905 357,757 6,462,545 Gross unrealized gains Gross unrealized losses Fair value
(3) Structured notes of AFS financial assets are as follows (Unit: Korean Won in millions):
December 31, 2011 Face value Structured notes relating to stock: Convertible bonds Structured notes relating to credit risk: Synthetic CDO (*1) Cash CDO Total 57,665 150,865 \ 219,624 \Credit risk of underlying assets Credit risk of underlying assets \ 11,094 \Decrease in related stock price Carrying value Potential Risk
December 31, 2010 Face value Structured notes relating to stock: Convertible bonds \ 11,023 \Decrease in related stock price Carrying value Potential Risk
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December 31, 2010 Face value Structured notes relating to credit risk: Synthetic CDO (*1) Cash CDO Total 56,945 186,109 \ 254,077 13,180 \ 13,180 Credit risk of underlying assets Credit risk of underlying assets Carrying value Potential Risk
January 1, 2010 Face value Structured notes relating to stock: Convertible bonds Structured notes relating to credit risk: Synthetic CDO (*1)
Carrying value
Potential Risk
\ 10,194
\-
Decrease in related stock price
249,306 255,017 \ 514,517
81,218 22,474 \ 103,692
Credit risk of underlying assets Credit risk of underlying assets
Cash CDO Total

(*1) Synthetic CDO is designated as financial asset at FVTPL.
9. HTM FINANCIAL ASSETS

(1) Details of HTM financial assets are as follows (Unit: Korean Won in millions):
December 31, 2011 In local currency: Korean treasury and government agencies Financial institutions Corporates Sub-total In foreign currencies: Debt securities Loaned securities Total 102,966 \ 15,400,425 143,537 \ 15,920,317 197,678 12,498 \ 12,527,029 \ 5,131,953 5,193,115 4,972,391 15,297,459 \ 4,878,080 6,955,940 3,942,760 15,776,780 \ 1,705,947 9,996,894 614,012 12,316,853 December 31, 2010 January 1, 2010
FINANCIAL REVIEW
(2) Details of unrealized gains or losses on HTM financial assets are as follows (Unit: Korean Won in millions):
December 31, 2011 Amortized cost (or cost) In local currency: Korean treasury and government agencies Financial institutions Corporates Sub-total In foreign currencies: Debt securities Total 102,966 \ 15,400,425 \ 110,543 \ (6,052) 102,966 \ 15,504,916 \ 5,131,953 5,193,115 4,972,391 15,297,459 \ 61,079 11,249 38,215 110,543 \ (1,382) (414) (4,256) (6,052) \ 5,191,650 5,203,950 5,006,350 15,401,950 Gross unrealized gains Gross unrealized losses Fair value
December 31, 2010 Amortized cost (or cost) In local currency: Korean treasury and government agencies Financial institutions Corporates Sub-total In foreign currencies: Debt securities Total 143,537 \ 15,920,317 \ 126,504 \ (8,985) 143,537 \ 16,037,836 \ 4,878,080 6,955,940 3,942,760 15,776,780 \ 46,778 42,899 36,827 126,504 \ (5,641) (615) (2,729) (8,985) \ 4,919,217 6,998,224 3,976,858 15,894,299 Gross unrealized gains Gross unrealized losses Fair value
January 1, 2010 Amortized cost (or cost) In local currency: Korean treasury and government agencies Financial institutions Corporates Sub-total In foreign currencies: Debt securities Loaned securities Total 197,678 12,498 \ 12,527,029 \ 50,802 \ (33,440) 197,678 12,498 \ 12,544,391 \ 1,705,947 9,996,894 614,012 12,316,853 \ 4,600 41,410 4,792 50,802 \ (13,422) (18,964) (1,054) (33,440) \ 1,697,125 10,019,340 617,750 12,334,215 Gross unrealized gains Gross unrealized losses Fair value
WOORI BANK

10. LOANS AND RECEIVABLES

(1) Details of loans and receivables are as follows (Unit: Korean Won in millions):
December 31, 2011 Due from banks Provisions for credit losses Sub-total Loans and other receivables Provisions for credit losses Sub-total Total \ 11,864,976 (4,431) 11,860,545 183,395,456 (3,346,969) 180,048,487 \ 191,909,032 December 31, 2010 \ 8,854,017 (8,547) 8,845,470 172,948,128 (4,162,723) 168,785,405 \ 177,630,875 January 1, 2010 \ 5,355,650 (14,998) 5,340,652 174,679,512 (3,170,830) 171,508,682 \ 176,849,334
(2) Details of due from banks are as follows (Unit: Korean Won in millions):
December 31, 2011
December 31, 2010
January 1, 2010
Due from banks in local currency: Due from the BOK Due from depository institutions Due from non-depository financial institutions Due from the Korea Exchange Others Provisions for credit losses Sub-total Due from banks in foreign currencies: Due from banks in other bank Due from banks on time Others Provisions for credit losses Sub-total Total 618,766 439,266 599,351 (2,068) 1,655,315 \ 11,860,545 696,553 152,361 285,830 (7,021) 1,127,723 \ 8,845,470 395,708 67,020 364,523 (9,386) 817,865 \ 5,340,652 \ 10,166,149 14,972 7,975 5,659 12,838 (2,363) 10,205,230 \ 7,442,596 156,964 29,429 2,450 87,834 (1,526) 7,717,747 \ 3,833,828 546,156 20,760 1,817 125,838 (5,612) 4,522,787
(3) Details of restricted due from banks are as follows (Unit: Korean Won in millions):
Financial institution In local currency: BOK Korea Exchange \ 10,166,148 250 \ 7,442,596 125 \ 3,833,828 125 BOK Act Deposits for required settlement charges December 31, 2011 December 31, 2010 January 1, 2010 Reasons
FINANCIAL REVIEW
Financial institution Samsung Securities and others Others Sub-total Financial institution In local currency: BOK Bank of Japan and others Central bank of Indonesia and other Central bank of Bangladesh and others Macquarie bank and others Sub-total Total
December 31, 2011 7,617 12 10,174,027 December 31, 2011
December 31, 2010 77,386 12 7,520,119 December 31, 2010
January 1, 2010 103,429 12 3,937,394 January 1, 2010
Reasons Deposits for futures margin and others Pledged commission income
Reasons
\ 321,959 68,359 499,347 66,771 513 956,949 \ 11,130,976
\ 275,545 134,113 430,717 38,616 41,487 920,478 \ 8,440,597
\ 255,942 186,151 159,030 37,720 228,118 866,961 \ 4,804,355
BOK Act Reserve deposits in foreign branches and others Reserve deposits and others Installation deposits of financial institution and others Collateral for derivatives transaction and others
(4) Details of loans and other receivables are as follows (Unit: Korean Won in millions):
December 31, 2011 Loans: Loans in local currency: Loans to enterprises: Working capital Facilities and equipment Sub-total Loans to households: General purpose Housing Other Sub-total Loans to public sector and other: Working capital Facilities and equipment Other Sub-total Inter-bank loans 2,721,453 1,411,145 40,032 4,172,630 833,057 2,137,823 1,138,996 22,907 3,299,726 906,456 2,134,099 984,610 41,797 3,160,506 1,387,563 53,010,634 8,561,428 259,198 61,831,260 52,718,344 4,397,441 172,322 57,288,107 53,604,142 2,227,410 559,086 56,390,638 \ 54,609,789 20,286,327 74,896,116 \ 55,769,282 17,709,083 73,478,365 \ 59,240,337 15,774,843 75,015,180 December 31, 2010 January 1, 2010
WOORI BANK

December 31, 2011 Provisions for credit losses Sub-total Loans in foreign currencies: Loans in foreign currencies Provisions for credit losses Sub-total Domestic bankers usance Credit card accounts: Credit card accounts Provisions for credit losses Sub-total Bills bought in foreign currencies: Bills bought in foreign currencies Provisions for credit losses Sub-total Bills bought in local currency: Bills bought in local currency Present value discount Provision for bills bought in local currency Sub-total Factoring receivables Advances for customers: Advances for customers Provisions for credit losses Sub-total Privately placed bonds: Privately placed bonds Present value discount Provisions for credit losses Sub-total Loans for debt-equity swap Backed loans: Backed loans Provisions for credit losses Sub-total Other loans: Other loans 48,786 607,598 (120,411) 487,187 1,332,594 (20,828) (16,536) 1,295,230 \ 498 33,809 (23,874) 9,935 481,071 (1,469) (43) 479,559 206,684
December 31, 2010 (3,191,583) 131,781,071
January 1, 2010 (2,052,675) 133,901,212
(2,478,721) 139,254,342
12,024,482 (288,799) 11,735,683 5,086,592
12,268,802 (323,283) 11,945,519 4,033,849
12,449,807 (346,090) 12,103,717 3,735,013
4,194,926 (119,480) 4,075,446
3,945,353 (113,172) 3,832,181
3,689,923 (135,137) 3,554,786
5,161,871 (59,142) 5,102,729
4,568,485 (55,959) 4,512,526
4,387,997 (80,239) 4,307,758
176,613 176,613 58,235
454,218 (55) 454,163 46,571
296,994 (117,304) 179,690
52,995 (42,889) 10,106
2,076,686 (2,342) (73,643) 2,000,701 \ 498
2,940,569 (4,068) (58,828) 2,877,673 \ 578
531,444 (124,582) 406,862
432,626 (161,280) 271,346
148,258
175,157
FINANCIAL REVIEW
December 31, 2011 Provisions for credit losses Sub-total Others: Fair value hedging adjustment Deferred loan origination fees and costs Sub-total Call loans Bonds purchased under resale agreements Loans-total Other receivables: Cash Management Account (CMA) Accounts receivables Accrued income Guarantee deposits Other assets Present value discount Provisions for credit losses Other receivable-total Total 20,000 6,149,759 973,880 965,033 608,873 (57,362) (234,234) 8,425,949 \ 180,048,487 404 154,131 154,535 3,099,061 592,000 171,622,538 (5,729) 43,057
December 31, 2010 (22,354) 125,904
January 1, 2010 (38,159) 136,998
571 70,366 70,937 3,319,571 508,397 162,952,554
754 21,644 22,398 4,508,782 1,507,023 167,438,124
901,612 2,411,417 771,901 950,887 998,978 (61,101) (140,843) 5,832,851 \ 168,785,405
181,000 2,113,539 677,278 970,896 456,038 (72,715) (255,478) 4,070,558 \ 171,508,682
(5) Changes in the provisions for credit losses on loans and receivables are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Beginning balance Provisions for credit losses Increase on repurchase of non-performing loans Recoveries of written-off loans Charge-off Foreign exchange translation adjustment Sales of loans and receivables Other sales Ending balance \ (4,171,270) (1,710,653) (1,835) (59,620) 2,094,854 (7,215) 484,076 20,263 \ (3,351,400) For the year ended December 31, 2010 \ (3,185,828) (2,412,261) (134,087) 1,250,991 (507) 234,646 153,158 \ (4,171,270)
WOORI BANK

(6) Changes in deferred loan origination fees and costs are as follows (Unit: Korean Won in millions):
December 31, 2011 Balance at January 1, 2011 Deferred loan origination fees Deferred loan origination costs \ (62,619) 132,985 \ 70,366 Increase \ (38,856) 144,640 Decrease \ 52,912 (74,931) Balance at December 31, 2011 \ (48,563) 202,694 \ 154,131
December 31, 2010 Balance at January 1, 2010 Deferred loan origination fees Deferred loan origination costs \ (88,905) 110,549 \ 21,644
136
Increase \ (53,152) 67,313
Decrease \ 79,438 (44,877)
Balance at December 31, 2010 \ (62,619) 132,985 \ 70,366
11. THE FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The Group classified and discloses fair value of the financial instruments into the following three-level hierarchy: Level 1: fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices). Level 3: fair value measurements are those derived from valuation technique that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(1) Fair value hierarchy of financial assets and liabilities measured at fair value is as follows (Korean Won in millions):
December 31, 2011 Level 1 Financial assets: Financial assets held for trading: Securities in local currency: Korean treasury and government agencies Financial institutions Corporates Equity securities Other securities Loaned securities \ 588,094 282,889 19,876 \ 358 2,653,822 3,977 2,140,121 \\ 588,452 2,653,822 3,977 282,889 2,140,121 19,876 Level 2 Level 3 Total
FINANCIAL REVIEW
December 31, 2011 Level 1 Sub-total Derivatives instruments assets (*1): Interest rate derivatives Currency derivatives Equity derivatives Commodity derivatives Sub-total Other financial assets (CMA CP) Total AFS financial assets: Securities in local currency: Debt securities: Korean treasury and government agencies Financial institutions Corporates Others Sub-total Equity securities: Listed stock Unlisted stock Capital contributions Beneficiary certificates Sub-total Sub-total Securities in foreign currencies: Debt securities Equity securities Sub-total Loaned securities Total 9,116 3,449 12,565 80,193 \ 2,961,488 189,933 189,933 \ 10,096,544 136,067 136,067 \ 1,612,575 199,049 139,516 338,565 80,193 \ 14,670,607 400,205 400,205 2,868,730 3,511,812 3,511,812 9,906,611 476,831 747,675 252,002 1,476,508 1,476,508 877,036 747,675 252,002 3,511,812 5,388,525 14,251,849 \ 2,468,525 2,468,525 \ 9,740 3,994,503 2,390,187 369 6,394,799 \\ 2,478,265 3,994,503 2,390,187 369 8,863,324 644 644 \ 891,503 1,749,328 1,867,416 21,871 16,346 3,654,961 2,268,325 \ 10,721,564 31,191 31,191 \ 31,191 1,749,328 1,867,416 53,706 16,346 3,686,796 2,268,325 \ 11,644,258 890,859 Level 2 4,798,278 Level 3 Total 5,689,137
December 31, 2011 Level 1 Financial liabilities: Financial liabilities at trading: Borrowings(Securities in short position) \ 8,105 \\\ 8,105 Level 2 Level 3 Total
WOORI BANK

December 31, 2011 Level 1 Derivatives instruments liabilities(*1): Interest rate derivatives Currency derivatives Equity derivatives Commodity derivatives Sub-total Sub-total Financial liability designated at FVTPL: Debentures in local currency Debentures in foreign currencies Sub-total Total \ 8,185 226,433 95,775 322,208 \ 3,243,313 \ 283,650 226,433 95,775 322,208 \ 3,535,148 80 80 8,185 1,523,437 1,336,231 44,466 16,971 2,921,105 2,921,105 43 283,607 283,650 283,650 1,523,480 1,336,231 328,153 16,971 3,204,835 3,212,940 Level 2 Level 3 Total
138
December 31, 2010 Level 1 Financial assets: Financial assets held for trading: Securities in local currency: Korean treasury and government agencies Financial institutions Corporates Equity securities Beneficiary certificate Other securities Loaned securities Sub-total Derivatives instruments assets (*1) Interest rate derivatives Currency derivatives Equity derivatives Commodity derivatives Sub-total Other financial assets (CMA CP) Total 29 29 \ 1,766,135 1,412,929 2,124,661 34,472 25,439 3,597,501 1,485,270 \ 9,466,361 4,778 4,778 \ 4,778 1,412,929 2,124,661 39,279 25,439 3,602,308 1,485,270 \ 11,237,274 \ 1,159,917 196,567 409,622 1,766,106 \ 1,278 1,304,500 9,515 300 3,067,997 4,383,590 \\ 1,161,195 1,304,500 9,515 196,567 300 3,067,997 409,622 6,149,696 Level 2 Level 3 Total
FINANCIAL REVIEW
December 31, 2010 Level 1 AFS financial assets: Securities in local currency: Debt securities: Korean treasury and government agencies Financial institutions Corporates Others Sub-total Equity securities: Listed stock Unlisted stock Capital contributions Beneficiary certificates Sub-total Sub-total Securities in foreign currencies: Debt securities Equity securities Sub-total Loaned securities Total Financial liabilities: Financial liabilities at trading: Borrowings (Securities in short position) Derivatives instruments liabilities (*1): Interest rate derivatives Currency derivatives Equity derivatives Credit derivatives Commodity derivatives Sub-total Sub-total Financial liability designated at FVTPL: Debentures in local currency Debentures in foreign currencies Sub-total Total \ 21,730 238,736 1,270,544 1,509,280 \ 4,429,032 \ 313,231 238,736 1,270,544 1,509,280 \ 4,763,993 2,829 2,829 21,730 1,405,820 1,444,968 43,399 25,565 2,919,752 2,919,752 311,631 1,600 313,231 313,231 1,405,820 1,444,968 357,859 1,600 25,565 3,235,812 3,254,713 \ 18,901 \\\ 18,901 9,926 10,559 20,485 758,475 \ 3,459,429 197,115 197,115 90,019 \ 11,086,133 138,628 138,628 \ 2,064,528 207,041 149,187 356,228 848,494 \ 16,610,090 471,602 471,602 2,680,469 4,463,691 4,463,691 10,798,999 1,074,958 640,966 209,976 1,925,900 1,925,900 1,546,560 640,966 209,976 4,463,691 6,861,193 15,405,368 \ 2,208,867 2,208,867 \ 53,141 4,939,624 1,314,616 27,927 6,335,308 \\ 2,262,008 4,939,624 1,314,616 27,927 8,544,175 Level 2 Level 3 Total
WOORI BANK

January 1, 2010 Level 1 Financial assets: Financial assets held for trading: Securities in local currency: Korean treasury and government agencies Financial institutions Corporates Equity securities Beneficiary certificates Other securities Loaned securities Sub-total Derivatives instruments assets (*1): Interest rate derivatives Currency derivatives Equity derivatives
141 _ 2011 ANNUAL REPORT 140
Level 2
Level 3
Total
\ 2,119,352 311,762 11,261 2,442,375 2,442,375
\ 1,276 684,193 67,729 2,036 3,624,250 4,379,484 1,283,608 2,677,650 45,000 40,177 4,046,435 1,479,294 9,905,213
\2,338 2,338 2,338
\ 2,120,628 684,193 67,729 311,762 2,036 3,624,250 11,261 6,821,859 1,283,608 2,677,650 47,338 40,177 4,048,773 1,479,294 12,349,926
Commodity derivatives Sub-total Other financial assets (CMA CP) Total Financial asset designated at FVTPL Financial institution bonds in foreign currencies Total AFS financial assets: Securities in local currency: Debt securities: Korean treasury and government agencies Financial institutions Corporates Others Sub-total Equity securities: Listed stock Unlisted stock Capital contributions Beneficiary certificates Sub-total Sub-total
\ 2,442,375
11,209 \ 9,916,422
81,218 \ 83,556
92,427 \ 12,442,353
\ 2,353,498 2,353,498 190,088 190,088 2,543,586
\ 137 2,558,248 1,192,905 357,757 4,109,047 7,041,622 7,041,622 11,150,669
\1,370,520 721,282 224,154 2,315,956 2,315,956
\ 2,353,635 2,558,248 1,192,905 357,757 6,462,545 1,560,608 721,282 224,154 7,041,622 9,547,666 16,010,211
FINANCIAL REVIEW
January 1, 2010 Level 1 Securities in foreign currencies: Debt securities Equity securities Sub-total Total 17,243 17,243 \ 2,560,829 475,854 475,854 \ 11,626,523 199,146 199,146 \ 2,515,102 475,854 216,389 692,243 \ 16,702,454 Level 2 Level 3 Total
January 1, 2010 Level 1 Financial liabilities: Financial liabilities at trading: Borrowings (Securities in short position) Derivatives instruments liabilities (*1): Interest rate derivatives Currency derivatives Equity derivatives Credit derivatives Commodity derivatives Sub-total Sub-total Financial liability designated at FVTPL Debentures in local currency Debentures in foreign currencies Sub-total Total \ 61,217 271,338 1,412,703 1,684,041 \ 5,251,774 \ 516,151 271,338 1,412,703 1,684,041 \ 5,829,142 2,730 2,730 61,217 1,344,679 2,040,164 140,409 42,481 3,567,733 3,567,733 312,834 203,317 516,151 516,151 1,344,679 2,040,164 455,973 203,317 42,481 4,086,614 4,145,101 \ 58,487 \\\ 58,487 Level 2 Level 3 Total
(*1) Derivatives classified FVTPL are included in derivative assets and liabilities.
Financial assets and liabilities at FVTPL, AFS financial assets, held-for-trading financial assets and liabilities and derivative assets and liabilities are recognized at fair value. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arms length transaction. Financial instruments are measured at fair value using a quoted market price in active markets. If there is no active market for a financial instrument, the Group establishes the fair value using valuation techniques. Fair value measurement methods for each type of financial instruments are as follows: Fair value measurement technique Financial assets and liabilities at FVTPL Held-for-trading financial assets and liabilities and AFS financial assets Financial assets and liabilities at FVTPL are measured at fair value using a price quoted by a third party, such as a pricing service or broker, or using valuation techniques. Held-for-trading financial assets and liabilities and AFS financial assets are measured at fair value using a quoted market price in an active market. If a quoted market price is not available, they are measured by using a price quoted by a third party, such as a pricing service or broker, or using valuation techniques.
WOORI BANK

Derivative assets and liabilities Loans and receivables
Derivatives are measured at fair value using a quoted market price in an active market. If a quoted market price is not available, they are measured at fair value using valuation techniques. Loans and receivables are measured by discounting expected future cash flows at a market interest rate of other loans with similar condition. HTM financial assets are measured by using a price quoted by a third party, such as a pricing service or broker. Deposits due to customers and borrowings are measured at fair value using discounting expected future cash flows at the interest rate of bond issued by the Group. However, if the carrying value is not significantly different from the fair value, it assumes that the carrying value is equal to the fair value. The fair value of issued bond shall be measured at the present value of cash flows using the swap interest rates. For some financial instruments, the fair value estimated by specialists, the third party, can be used.
HTM financial assets Deposits due to customers and borrowings Debentures
(2) Changes in financial assets and liabilities classified into Level 3 are as follows (Unit: Korean Won in millions):
Transfer into/out of level 3 for the year ended December 31, 2011 January 1, 2011
Profit or loss
Other comprehensive income
Purchase/ issuance
Settlement
December 31, 2011
Financial assets: Financial assets at FVTPL Financial assets held for trading Equity derivatives AFS financial assets Listed stock in local currency Unlisted stock in local currency Capital contributions in local currency Equity securities in foreign currencies Sub-total Financial liabilities: Financial liabilities at FVTPL Derivative liabilities Interest rate derivatives Equity derivatives Credit derivatives Sub-total 311,631 1,600 \ 313,231 43 (39,525) \ (39,482) \188,666 \ 188,666 (177,165) (1,600) \ (178,765) 43 283,607 \ 283,650 1,074,958 640,966 209,976 138,628 2,064,528 (43,735) (891) (9,361) (10,696) (64,683) (27,387) 32,571 13,322 15,498 34,004 5,043 132,919 83,536 7,088 228,586 (532,048) (57,890) (45,471) (14,451) (649,860) 476,831 747,675 252,002 136,067 1,612,575 \ 4,778 \ 6,869 \\ 22,915 \ (3,371) \ 31,191
FINANCIAL REVIEW
Transfer into/out of level 3 for the year ended December 31, 2010 January 1, 2010 Financial assets: Financial assets at FVTPL: Financial assets held for trading Equity derivatives Financial asset designated at FVTPL Sub-total AFS financial assets: Listed stock in local currency Unlisted stock in local currency Capital contributions in local currency Equity securities in foreign currencies Sub-total Financial liabilities: Financial liabilities at FVTPL Derivative liabilities Equity derivatives Credit derivatives Sub-total 312,834 203,317 \ 516,151 35,416 (3,598) \ 31,818 \188,927 \ 188,927 (225,546) (198,119) \ (423,665) 311,631 1,600 \ 313,231 1,370,520 721,282 224,154 199,146 2,515,102 (33,191) (427) (3,720) (31,601) (68,939) 38,274 17,251 (3,902) 6,447 58,070 112,824 182,569 23,558 17,602 336,553 (413,469) (279,709) (30,114) (52,966) (776,258) 1,074,958 640,966 209,976 138,628 2,064,528 \ 2,338 81,218 83,556 \ 586 586 \\ 1,854 1,854 \(81,218) (81,218) \ 4,778 4,778 Profit or loss Other comprehensive income Purchase/ issuance December 31, 2010
Settlement
All recognized gains and losses recognized in profit or loss for the period are related to the holding assets of current and previous period-end. Gain and loss on the fair value of derivatives and AFS financial assets are included in gain and loss on financial assets at FVTPL and AFS financial assets, respectively.
(3) Fair value and carrying amount of financial assets and liabilities that are recorded at amortized cost are as follows (Unit: Korean Won in millions):
December 31, 2011 Fair value Financial assets: HTM financial assets Loans and receivables Financial liabilities: Deposits due to customers Borrowings Debentures 164,044,745 19,109,619 20,094,790 164,092,476 19,174,642 19,811,813 \ 15,504,916 193,429,738 \ 15,400,425 191,909,032 Carrying amount
WOORI BANK

December 31, 2011 Fair value Other financial liabilities Financial guarantee liabilities 16,347,046 186,638 Carrying amount 16,346,969 186,638
December 31, 2010 Fair value Financial assets: HTM financial assets Loans and receivables Financial liabilities: Deposits due to customers Borrowings Debentures Other financial liabilities Financial guarantee liabilities
Carrying amount
\ 16,037,836 178,363,518
\ 15,920,317 177,630,875
157,278,891 18,895,571 20,507,210 8,800,536 80,196
157,314,309 18,982,971 20,192,427 8,799,937 80,196
January 1, 2010 Fair value Financial assets: HTM financial assets Loans and receivables Financial liabilities: Deposits due to customers Borrowings Debentures Other financial liabilities Financial guarantee liabilities 150,042,881 20,889,127 23,736,888 8,428,829 197,860 150,124,550 20,752,335 23,476,103 8,429,081 197,860 \ 12,544,391 178,407,364 \ 12,527,029 176,849,334 Carrying amount
FINANCIAL REVIEW
12. INVESTMENTS IN ASSOCIATES

(1) Investments in associates accounted for using the equity method are as follows (Unit: Korean Won in millions):
December 31, 2011 Main business Manufacturing Securities investment Freight & staffing Securities investment Credit information Security service Securities investment Construction Construction Number of shares owned 22,514,800 75,400 4,704 64,508 144,000 183,870 148,000 755,946 1,667,600 Percentage of ownership (%) 21.2 21.4 4.9 28.9 7.2 15.3 18.5 23.2 21.7 Financial statements as of December 31 December 31 December 31 December 31 December 31 December 31 December 31 -
Investee Kumho Tires Co., Ltd. (*1) Woori Blackstone Korea Opportunity Private Equity Fund 1 Woori Service Networks Co., Ltd. (*2) Woori Private Equity Fund Korea Credit Bureau Co., Ltd. (*2) Korea Finance Security Co., Ltd. (*2) United PF 1st Corporate Financial Stability (*2) LIG E&C Co., Ltd. Hyunjin Co., Ltd.
Location Korea U.S.A Korea Korea Korea Korea Korea Korea Korea
Capital \ 531,800 351,500 500 223,000 10,000 6,000 800,000 16,300 38,400
December 31, 2010 Number of shares owned 22,514,800 1,216,800 1,300 4,704 66,996 144,000 183,870 Percentage of ownership (%) 24.2 27.7 21.4 4.9 28.9 7.2 15.3 Financial statements as of December 31 December 31 December 31 December 31 December 31 December 31 December 31 Number of shares owned 1,216,800 4,704 71,124 144,000 183,870 82,960
January 1, 2010 Percentage of ownership (%) 27.7 4.9 29.0 7.2 15.3 5.0 Financial statements as of December 31 December 31 December 31 December 31 December 31 December 31
Investee Kumho Tires Co., Ltd. (*1) BC Card Co., Ltd. Woori Blackstone Korea Opportunity Private Equity Fund 1 Woori Service Networks Co., Ltd. (*2) Woori Private Equity Fund Korea Credit Bureau Co., Ltd. (*2) Korea Finance Security Co., Ltd. (*2) Woori SME 1 ABS Co., Ltd. (*3)
st
(*1) Besides Kumho Tire Co., Ltd., there are no other investments in associates for which there are published price quotations. The market price per share as of December 31, 2011 and 2010 for Kumho Tire Co., Ltd. is \ 10,400 and \ 13,850, respectively. (*2) The Group has the significant influence over electing the executive who have the power to participate in the financial and operating policy decisions of Korea Credit Bureau Co., Ltd. and United PF 1st Corporate Financial Stability. And the majority of the important transactions of Korea Finance Security and Woori Service Networks Co., Ltd. are mainly arranged with the Group. (*3) The Group has the significant influence over electing the executive who have the power to participate in the financial and operating policy decisions.
WOORI BANK

(2) Excluded entity from associates, although its percentage of ownership is higher than 20% as of December 31, 2011, is as follows:
Associate Vogo 2-2 Special Purpose Entity (*1) Number of shares owned 24,067,739,877 Percentage of ownership 34.6 %
(*1) The entity is excluded from the associates because substantially the Group has no significant influence over the investee company although its percentage of ownership on common share is higher than 20%.
(3) Changes in carrying value of investments in associates accounted for using the equity method are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Acquisition cost \ 113,204 10,876 75,400 January 1, 2011 \ 113,204 136,270 24 Gain (loss) on valuation \ (12,952) 2,704 Acquisition \74,100 Disposition and other \(80,625) Dividends \Other changes \ 14,665 (30,857) December 31, 2011 \ 111,357 76,828
Investee Kumho Tires Co., Inc. BC Card Co., Ltd. Woori Blackstone Korea Opportunity Private Equity Fund 1 Woori Service Networks Co., Ltd. Woori Private Equity Fund Korea Credit Bureau Co., Ltd. Korea Finance Security Co., Ltd. United PF 1st Corporate Financial Stability Total
Capital \ (3,560) (24,788) -
24 64,508 3,600 758 148,000 \ 416,370
104 50,637 2,554 3,436 \ 306,229
6 (15,315) 458 87 1,099 \ (23,913)
148,000 \ 222,100
(2,487) \ (83,112)
(12) (55) \ (67)
(360) \ (28,708)
\ (16,192)
98 32,475 3,012 3,468 149,099 \ 376,337
For the year ended December 31, 2010 Gain (loss) on valuation \43,509 (1,276) December 31, 2010 \ 113,204
1,769)36,270
Investee Kumho Tire Co., Inc. BC Card Co., Ltd. Woori Blackstone Korea Opportunity Private Equity Fund Woori Service Networks Co., Ltd. Woori Private Equity Fund Korea Credit Bureau Co., Ltd.
Acquisition cost \ 113,204 10,876 1,300
January 1, 2010 \182,965 -
Acquisition \ 113,204 1,300
Disposition and other \-
Dividends \(62,769)
Capital \(27,435) -
Other changes \-
24
24 66,996 3,600
108 59,801 2,215
(2) (3,499) 339
977 -
(5,105) -
(434) -
(1,103) -
104 50,637 2,554
FINANCIAL REVIEW
Korea Finance Security Co., Ltd. Woori SME 1st ABS Co., Ltd. Total
758 415 \ 197,173
3,337 406 \ 248,832
154 (1) \ 39,224
\ 115,481
(405) \ (5,510)
(55) \ (63,260)
6 \ (28,532)
(6) \ (6)
3,436 \ 306,229
The Group holds 755,946 shares (holding rate: 23.2%) of LIG E&C Co., Ltd., and 1,667,600 shares (holding rate: 21.7%) of Hyunjin Co., Ltd. besides investments in associated above due to the conversion of investment on written-off loans for the year ended December 31, 2011and there are no carrying values of the investments as of the conversion date and December 31, 2011, respectively.
(4) Financial information of investments in associates accounted for using the equity method is as follows (Unit: Korean Won in millions):
December 31, 2011 Investee Kumho Tire Co., Inc. Woori Blackstone Korea Opportunity Private Equity Fund Woori Service Networks Co., Ltd. Woori Private Equity Fund Korea Credit Bureau Co., Ltd. Korea Finance Security Co., Ltd. United PF 1 Corporate Financial Stability
st
Assets \ 4,634,196 358,946 3,541 1,540,494 51,484 24,446 836,104
Liabilities \ 4,112,068 750 1,552 1,394,267 9,650 1,812 30,162
Operating revenue \ 3,946,765 17,971 11,492 376,243 41,409 42,790 48,117
Net income (Net loss) \ (39,354) 12,608 697 (52,881) 6,380 1,069 5,942
December 31, 2010 Investee Kumho Tire Co., Inc. BC Card Co., Ltd. Woori Blackstone Korea Opportunity Private Equity Fund Woori Service Networks Co., Ltd. Woori Private Equity Fund Korea Credit Bureau Co., Ltd. Korea Finance Security Co., Ltd. Woori SME 1 ABS Co., Ltd.
st
Assets \ 2,516,861 1,913,096 1,679 3,067 2,071,949 44,983 24,493 8,116
Liabilities \ 2,016,356 1,380,225 1,567 977 1,819,739 9,507 2,068 18
Operating revenue \ 2,701,990 3,125,476 61 11,007 250,989 33,055 41,283 -
Net income (Net loss) \ 8,901 29,899 (5,949) 883 (12,255) 4,428 1,847 (12)
WOORI BANK

13. INVESTMENT PROPERTIES

(1) Investment properties are as follows (Unit: Korean Won in millions):
December 31, 2011 Acquisition cost Accumulated depreciation Net carrying value \ 357,263 (7,804) \ 349,459 December 31, 2010 \ 371,231 (4,357) \ 366,874 January 1, 2010 \ 392,905 (942) \ 391,963
(2) Changes in investment properties are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Beginning balance Disposition Depreciation Impairment loss Transfer to properties for business use Foreign currencies translation adjustment Others Ending balance
For the year ended December 31, 2010 \ 391,963 (3,439) (3,911) (17,524) (25) (190) \ 366,874
\ 366,874 (11,780) (3,433) (2,212) 11 (1) \ 349,459
(3) Fair value of investment properties as of December 31, 2011 are as follows (Unit: Korean Won in millions):
Classification Woori Finance Sangam Center and other The latest revaluation date December 31, 2009 Land \ 252,090 Building \ 139,873 Total \ 391,963
The fair value of investment properties is determined by the assessment performed by Korea Appraisal Board, the independent appraiser who has proper qualification and experience. In addition, the above appraised value includes the amount of portion used for business by the Group.
(4) For the years ended December 31, 2011 and 2010, the revenue occurred from investment properties is \ 16,553 million and \ 13,652 million, respectively.
FINANCIAL REVIEW
14. PREMISES AND EQUIPMENT

(1) Details of premises and equipment are as follows (Unit: Korean Won in millions):
December 31, 2011 Land Acquisition cost Accumulated depreciation Net carrying value \ 1,519,991 \ 1,519,991 Building \ 736,786 (44,527) \ 692,259 Properties for business use \ 362,705 (275,295) \ 87,410 Structures in leased office \ 287,242 (243,774) \ 43,468 Construction in progress \ 2,832 \ 2,832 Total \ 2,909,556 (563,596) \ 2,345,960
December 31, 2010 Land Acquisition cost Accumulated depreciation Net carrying value \ 1,520,737 \ 1,520,737 Building \ 713,642 (22,828) \ 690,814 Properties for business use \ 349,406 (269,496) \ 79,910 Structures in leased office \ 267,924 (226,450) \ 41,474 Construction in progress \ 1,451 \ 1,451 Total \ 2,853,160 (518,774) \ 2,334,386
January 1, 2010 Land Acquisition cost Accumulated depreciation Net carrying value \ 1,510,713 \ 1,510,713 Building \ 699,250 (2,793) \ 696,457 Properties for business use \ 351,859 (250,266) \ 101,593 Structures in leased office \ 252,764 (202,637) \ 50,127 Construction in progress \\Total \ 2,814,586 (455,696) \ 2,358,890
(2) Details of changes in premises and equipment are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Land Beginning balance Foreign currencies translation adjustment Acquisition Disposition Depreciation Impairment loss Classified to assets held for sale \ 1,520,737 15 3,449 (2,728) (1,482) Building \ 690,814 28 24,776 (429) (21,748) (59) (1,123) Properties for business use \ 79,910 72 40,797 (597) (32,772) Structures in leased office \ 41,474 183 21,413 (534) (19,685) Construction in progress \ 1,451 2,812 Total \ 2,334,386 298 93,247 (4,288) (74,205) (59) (2,605)
WOORI BANK

For the year ended December 31, 2011 Land Transfer (*1) Others Ending balance \ 1,519,991 Building \ 692,259 Properties for business use \ 87,410 Structures in leased office 617 \ 43,468 Construction in progress (1,431) \ 2,832 Total (1,431) 617 \ 2,345,960
For the year ended December 31, 2010 Land Beginning balance Foreign currencies translation adjustment Acquisition Disposition Depreciation Impairment loss
Building \ 696,457 2 6,972 (3,151) (20,264) (289) 1,688 1,915 7,484 \ 690,814
Properties for business use \ 101,593 (30) 28,359 (13,534) (36,478) \ 79,910
Structures in leased office \ 50,127 (212) 17,435 (473) (26,129) 726 \ 41,474
Construction in progress \3,780 (2,329) \ 1,451
Total \ 2,358,890 (268) 56,565 (18,052) (82,871) (402) 2,274 18,250 \ 2,334,386
\ 1,510,713 (28) 19 (894) (113) 586 414 10,040 \ 1,520,737
Classified from assets held for sale Transfer Others Ending balance
(*1) \ 1,431 million is transferred to other intangible assets.
15. INTANGIBLE ASSETS

(1) Details of intangible assets are as follows (Unit: Korean Won in millions):
December 31, 2011 Development cost \ 14,590 (11,417) \ 3,173 Industrial property rights \ 239 (89) \ 150 Core deposit \ 3,395 (2,801) \ 594 Membership deposit \ 11,701 \ 11,701
Goodwill Acquisition cost Accumulated depreciation Net carrying value \\-
Software \ 766 (298) \ 468
Others \ 338,311 (207,010) \ 131,301
Total \ 369,002 (221,615) \ 147,387
FINANCIAL REVIEW
December 31, 2010 Development cost \ 14,573 (9,404) \ 5,169 Industrial property rights \ 192 (61) \ 131 Core deposit \ 3,353 (2,431) \ 922 Membership deposit \ 12,353 \ 12,353
Goodwill Acquisition cost Accumulated depreciation Net carrying value \ 209 \ 209
Software \ 364 (207) \ 157
Others \ 182,119 (161,694) \ 20,425
Total \ 213,163 (173,797) \ 39,366
January 1, 2010 Development cost \ 12,426 (6,887) \ 5,539 Industrial property rights \ 131 (37) \ 94 Core deposit \ 3,437 (2,148) \ 1,289 Membership deposit \ 9,279 \ 9,279
Goodwill Acquisition cost Accumulated depreciation Net carrying value \ 214 \ 214
Software \ 274 (165) \ 109
Others \ 188,865 (137,246) \ 51,619
Total \ 214,626 (146,483) \ 68,143
(2) Details of changes in intangible assets are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Development cost \ 5,169 3 18 (1,999) (18) \ 3,173 Industrial property rights \ 131 47 (28) \ 150 Core deposit \ 922 (2) (326) \ 594 Membership deposit \ 12,353 (124) 254 (782) \ 11,701
Goodwill Beginning balance Foreign currencies translation adjustment Acquisition Depreciation Impairment loss Disposal Transfer (*1) Ending balance \ 209 (6) (203) \-
Software \ 157 402 (91) \ 468
Others \ 20,425 235 156,733 (46,658) (865) 1,431 \ 131,301
Total \ 39,366 106 157,454 (49,102) (203) (1,665) 1,431 \ 147,387
For the year ended December 31, 2010 Development cost \ 5,539 Industrial property rights \ 94 Core deposit \ 1,289 Membership deposit \ 9,279
Goodwill Beginning balance \ 214
Software \ 109
Others \ 51,619
Total \ 68,143
WOORI BANK

For the year ended December 31, 2010 Development cost 11 2,120 (2,501) \ 5,169 Industrial property rights 61 (24) \ 131 Core deposit (27) (340) \ 922 Membership deposit (37) 3,461 (350) \ 12,353
Goodwill Foreign currencies translation adjustment Acquisition Depreciation Disposal Ending balance (5) \ 209
Software 90 (42) \ 157
Others (55) 5,369 (36,464) (44) \ 20,425
Total (113) 11,101 (39,371) (394) \ 39,366
(*1) \1,431 million is transferred from construction in progress.
16. OTHER ASSETS

Details of other assets are as follows (Unit: Korean Won in millions): December 31, 2011 Suspense receivables: Suspense receivables in local currency Suspense receivables in foreign currencies Sub-total Advance payments Prepaid expenses: Prepaid expenses in local currency Prepaid expenses in foreign currencies Unearned interest of prepaid expenses Sub-total Others Supplies and others Non-operative assets: Non-operative real properties Provision for valuation Sub-total Total 555 555 \ 225,530 3,639 (787) 2,852 \ 207,467 2,973 2,973 \ 251,542 4,094 2,894 2,128 189,169 11,475 188 200,832 138,407 12,313 382 151,102 178,938 13,903 498 193,339 \20,049 20,049 \ 34,812 4,359 39,171 11,448 \ 48,586 4,516 53,102 December 31, 2010 January 1, 2010
FINANCIAL REVIEW
17. ASSETS HELD FOR SALE

In accordance with K-IFRS No. 1105 Non-current assets held for sale and discontinued operations, the Group reclassified certain assets into assets held for sale as of January 1, 2010. Assets held for sale of \2,258 million, \5,185 million, and \7,609 million, respectively, are recorded as of December 31, 2011, December 31, 2010, and January 1, 2010.
18. ASSETS SUBJECTED TO LIEN AND ASSETS ACQUIRED THROUGH A FORECLOSURE

(1) Details of assets subjected to lien are as follows (Unit: Korean Won in millions):
December 31, 2011 Collateral given to Due from banks Securities Loans Central bank of Bangladesh and others BOK and others Woo-Jeong saving bank Amount \ 69,606 7,093,822 80,536 \ 7,243,964 Reason for collateral Reserves for capital and others Limitation on total loan exposure and others Collateral for borrowings
December 31, 2010 Collateral given to Due from banks Securities Loans Central bank of Bangladesh and others BOK and others Woo-Jeong saving bank Amount \ 82,762 6,803,833 75,666 \ 6,962,261 Reason for collateral Reserves for capital and others Limitation on total loan exposure and others Collateral for borrowings
January 1, 2010 Collateral given to Due from banks Securities Loans Morgan Stanley Co., Intl. and others BOK and others Woo-Jeong saving bank Amount \ 274,009 7,326,488 127,737 \ 7,728,234 Reason for collateral Collateral for credit derivatives transactions and others Limitation on total loan exposure and others Collateral for borrowings
(2) Assets acquired through a foreclosure are as follows (Unit: Korean Won in millions):
December 31, 2011 Land Building Provision for real estate properties \555 \ 555 December 31, 2010 \ 508 3,640 (787) \ 3,361 January 1, 2010 \ 521 2,973 \ 3,494
WOORI BANK

19. FINANCIAL LIABILITIES AT FVTPL

(1) Financial liabilities at FVTPL are as follows (Unit: Korean Won in millions):
December 31, 2011 Financial liabilities held for trading Financial liabilities designated at FVTPL Total \ 3,187,358 322,208 \ 3,509,566 December 31, 2010 \ 3,220,295 1,509,280 \ 4,729,575 January 1, 2010 \ 4,080,505 1,684,041 \ 5,764,546
(2) Details of financial liability held for trading are as follows (Unit: Korean Won in millions):
December 31, 2011 Borrowings Securities in short position Derivative liabilities: Interest rate derivatives Currency derivatives Stock derivatives
December 31, 2010
January 1, 2010
\ 8,105
\ 18,901
\ 58,487
1,500,077 1,334,052 328,153 16,971 3,179,253 \ 3,187,358
1,371,402 1,444,968 357,859 1,600 25,565 3,201,394 \ 3,220,295
1,280,083 2,040,164 455,973 203,317 42,481 4,022,018 \ 4,080,505
Credit derivatives Commodity derivatives Sub-total Total
(3) Details of financial liabilities designated at FVTPL are as follows (Unit: Korean Won in millions):
December 31, 2011 Debentures: Debentures in local currency Debentures in foreign currencies Discounts on debentures Total \ 226,433 95,775 \ 322,208 \ 238,736 1,273,039 (2,495) \ 1,509,280 \ 271,338 1,415,654 (2,951) \ 1,684,041 December 31,2010 January 1, 2010
A portion of liabilities which do not meet the definition of financial liabilities held for trading is designated as financial instrument at FVTPL by using fair value option to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise from recognizing assets and liabilities on a different basis.
(4) Credit risk adjustments to financial liabilities designated at FVTPL are as follows (Unit: Korean Won in millions):
December 31, 2011 Financial liabilities designated at FVTPL Changes in fair value for credit risk adjustments \ 322,208 6,462 December 31, 2010 \ 1,509,280 (564) January 1, 2010 \ 1,684,041 (10,996)
FINANCIAL REVIEW
December 31, 2011 Accumulated changes in credit risk adjustments \ (26,470)
December 31, 2010 \ 5,285
January 1, 2010 \ (10,996)
(5) Financial liabilities at FVTPLs carrying amount and face amount at maturity are as follows (Unit: Korean Won in millions):
December 31, 2011 Carrying amount Face amount at maturity Difference \ 322,208 296,498 \ 25,710 December 31, 2010 \ 1,509,280 1,472,864 \ 36,416 January 1, 2010 \ 1,684,041 1,675,282 \ 8,759
20. DEPOSITS DUE TO CUSTOMERS ( DEPOSITS )

(1) Details of deposits by interest type are as follows (Unit: Korean Won in millions):
December 31, 2011 Deposits in local currency: Deposits on demand: Interest bearing Non-interest bearing Money trust Deposits at termination Mutual installment Sub-total Certificate of deposits Other deposits: Deposits on notes payable Deposits on CMA Sub-total Deposits in foreign currencies: Interest bearing Non-interest bearing Sub-total Present value discount Total 9,178,643 1,192,566 10,371,209 (18,958) \ 164,092,476 7,558,144 875,623 8,433,767 (40,424) \ 157,314,309 8,395,791 1,350,883 9,746,674 (273,726) \ 150,124,550 2,479,546 1,752,379 4,231,925 3,458,658 2,150,747 5,609,405 3,024,917 1,554,060 4,578,977 \ 2,450,041 8,401,386 892 137,613,700 82,823 148,548,842 959,458 \ 2,710,250 4,740,959 912 133,984,449 110,314 141,546,884 1,764,677 \ 2,360,115 5,130,601 906 117,979,005 144,417 125,615,044 10,457,581 December 31, 2010 January 1, 2010
WOORI BANK

(2) Details of deposits by customers are as follows (Unit: Korean Won in millions):
December 31, 2011 Individuals Corporations Banks Government agencies Other financial institutions Government Non-profit corporations Educational organizations Foreign corporations Others Present value discount Total
December 31, 2010 \ 49,341,193 51,564,091 20,276,161 13,034,448 6,084,302 6,050,868 4,150,219 2,453,360 785,539 3,614,552 (40,424) \ 157,314,309
January 1, 2010 \ 45,267,536 49,650,186 20,919,348 12,898,296 4,240,488 7,319,476 3,484,399 2,288,067 435,467 3,895,013 (273,726) \ 150,124,550
\ 53,634,183 50,557,685 22,427,121 12,938,301 7,337,791 6,269,995 4,204,331 2,509,585 1,333,507 2,898,935 (18,958) \ 164,092,476
21. BORROWINGS AND DEBENTURES

(1) Details of borrowings are as follows (Unit: Korean Won in millions):
December 31, 2011 Lender Borrowings in local currency: Borrowings from the BOK Borrowing from government funds Others Sub-total Borrowings in foreign currencies Call-money Bonds sold under repurchase agreements Bills sold Securitized borrowings Present value discount Total Wilshire State Bank and others Banks Others Others Others 0.3 ~ 5.6 0.2 ~ 4.7 2.2 ~ 21.2 0.0 ~ 3.7 2.7 ~ 7.8 BOK Korea Environment Management Corporation and others Korea Finance Corporation and others 1.5 0.0 ~ 3.8 0.8 ~ 3.7 \ 651,854 1,936,670 2,090,819 4,679,343 9,862,373 2,908,505 985,141 96,453 644,900 (2,073) \ 19,174,642 Interest rate (%) Amount
FINANCIAL REVIEW
December 31, 2010 Lender Borrowings in local currency: Borrowings from the BOK Borrowing from government funds Others Sub-total Borrowings in foreign currencies Call-money Bonds sold under repurchase agreements Bills sold Securitized borrowings Present value discount Total January 1, 2010 Lender Borrowings in local currency: Borrowings from the BOK Borrowing from government funds Others Sub-total Borrowings in foreign currencies Call-money Bonds sold under repurchase agreements Bills sold Securitized borrowings Present value discount Total Deutsche Bank and others Banks Others Others Others 0.6 ~ 7.1 0.2 ~ 2.0 2.0 ~ 21.2 0.0 ~ 3.4 4.2 ~ 7.8 BOK Korea Environment Management Corporation and others Korea International Trade Association and others 1.3 0.0 ~ 5.3 3.0 ~ 3.8 \ 1,107,226 2,028,486 2,977,304 6,113,016 8,216,213 5,283,801 465,821 89,180 590,700 (6,396) \ 20,752,335 Interest rate (%) Amount Wachovia Bank and others Banks Others Others Others 0.5 ~ 6.4 0.1 ~ 5.0 2.0 ~ 21.2 0.0 ~ 3.0 2.5 ~ 7.8 BOK Korea Environment Management Corporation and others Korea Finance Corporation and others 1.3 0.0 ~ 5.0 3.0 ~ 3.5 \ 771,370 2,007,750 2,355,662 5,134,782 7,872,885 4,326,568 817,345 100,690 733,471 (2,770) \ 18,982,971 Interest rate (%) Amount
(2) Details of other monetary organizations borrowings are as follows (Unit: Korean Won in millions):
December 31, 2011 BOK Borrowings in local currency Borrowings in foreign currencies \ 651,854 General banks \ 641,360 4,940,001 Others \ 1,229 4,922,372 Total \ 1,294,443 9,862,373
WOORI BANK

December 31, 2011 BOK Call-money Bonds sold under repurchase agreements Total \ 651,854 General banks 1,165,105 \ 6,746,466 Others 1,743,400 985,141 \ 7,652,142 Total 2,908,505 985,141 \ 15,050,462
December 31, 2010 BOK Borrowings in local currency Borrowings in foreign currencies Call-money Bonds sold under repurchase agreements Total
158
General banks \ 735,379 3,964,695 1,544,568 \ 6,244,642
Others \ 58,002 3,908,190 2,782,000 817,345 \ 7,565,537
Total \ 1,564,751 7,872,885 4,326,568 817,345 \ 14,581,549
\ 771,370 \ 771,370
January 1, 2010
BOK Borrowings in local currency Borrowings in foreign currencies Call-money Bonds sold under repurchase agreements Total \ 1,107,226 \ 1,107,226
General banks \ 751,286 4,796,199 1,769,701 \ 7,317,186
Others \ 12,601 3,420,014 3,514,100 465,821 \ 7,412,536
Total \ 1,871,113 8,216,213 5,283,801 465,821 \ 15,836,948
(3) Details of debentures are as follows (Unit: Korean Won in millions):

December 31, 2011 Interest rate (%) Carrying value of bond: Ordinary bonds Subordinated bonds Sub-total Discount on bonds Total 0.5 ~ 10.5 4.7 ~ 10.3 \ 14,901,618 4,950,864 19,852,482 (40,669) \ 19,811,813 0.6 ~ 10.5 5.1 ~ 10.3 \ 16,456,439 3,770,616 20,227,055 (34,628) \ 20,192,427 0.5 ~ 10.5 5.0 ~ 10.3 \ 18,908,978 4,604,877 23,513,855 (37,752) \ 23,476,103 Amount December 31, 2010 Interest rate (%) Amount January 1, 2010 Interest rate (%) Amount
FINANCIAL REVIEW
22. PROVISIONS
(1) Details of provisions are as follows (Unit: Korean Won in millions):
December 31, 2011 Provisions for guarantees (*1) Provisions for unused commitments Provision for credit card point Other provisions Asset retirement obligation Retirement benefit obligation \ 437,557 116,444 701 19,603 11,080 22,227 \ 607,612 December 31, 2010 \ 284,599 152,355 10,721 30,879 18,159 23,116 \ 519,829 January 1, 2010 \ 278,191 172,328 11,136 28,228 16,984 43,894 \ 550,761
(*1) Provision for guarantee is including provision for financial guarantee of \186,638 million, \80,196 million, and \197,860 million as of December 31, 2011, December 31, 2010, and January 1, 2010, respectively.
(2) Changes in provision except asset retirement obligation and retirement benefit obligation are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Provisions for guarantees Beginning balance Provisions provided Provisions used and others Reversal of unused amount Foreign exchange translation adjustment Ending balance \ 284,599 147,120 11,202 (5,251) (113) \ 437,557 Provisions for unused commitments \ 152,355 2,391 1 (38,310) 7 \ 116,444 Provision for credit card point \ 10,721 9,339 (19,359) \ 701 Other provisions \ 30,879 1,379 (12,655) \ 19,603 Total \ 478,554 160,229 (20,811) (43,561) (106) \ 574,305
For the year ended December 31, 2010 Provisions for guarantees Beginning balance Provisions provided Provisions used and others Reversal of unused amount Foreign exchange translation adjustment Ending balance \ 278,191 194,166 (19,922) (167,794) (42) \ 284,599 Provisions for unused commitments \ 172,328 4,027 (26) (23,959) (15) \ 152,355 Provision for credit card point \ 11,136 22,429 (22,844) \ 10,721 Other provisions \ 28,228 4,236 13,355 (14,940) \ 30,879 Total \ 489,883 224,858 (29,437) (206,693) (57) \ 478,554
WOORI BANK

(3) Changes in asset retirement obligation are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Beginning balance Provisions provided Provisions used Discount rate adjustment Amortization Ending balance \ 18,159 617 (342) (7,377) 23 \ 11,080 For the year ended December 31, 2010 \ 16,984 726 (190) 639 \ 18,159
23. RETIREMENT BENEFIT OBLIGATION

(1) Details of retirement benefit obligation are as follows (Unit: Korean Won in millions):
160
December 31, 2011 Projected retirement benefit obligation Fair value of plan assets Liability recog nized \ 234,663 (212,436) \ 22,227
December 31, 2010 \ 139,539 (116,423) \ 23,116
January 1, 2010 \ 139,403 (95,509) \ 43,894
(2) Details of post-employee benefits recognized in profit and loss are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Current service cost Interest cost Expected return of plan assets Actuarial losses Losses on the curtailment or settlement \ 82,794 7,464 (5,697) 16,320 (299) \ 100,582 For the year ended December 31, 2011 the Group appropriate its contribution retirement benefit at the expense of \2,439 million. For the year ended December 31, 2010 \ 84,158 5,887 (5,784) (3,099) \ 81,162
(3) Changes in carrying value of retirement benefit obligation are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Beginning balance Service cost Interest cost Actuarial loss (gain) \ 139,539 82,794 7,464 15,361 For the year ended December 31, 2010 \ 139,403 84,158 5,887 (5,496)
FINANCIAL REVIEW
For the year ended December 31, 2011 Foreign currencies translation Adjustments Retirement benefit paid Losses on the curtailment or settlement Ending balance 104 (9,035) (1,564) \ 234,663
For the year ended December 31, 2010 21 (84,434) \ 139,539
(4) Changes in plan assets are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Beginning balance Expected return on plan assets Actuarial loss Employers contributions Retirement benefit paid Curtailment or settlement Others Ending balance \ 116,423 5,697 (959) 96,377 (3,643) (1,265) (194) \ 212,436 For the year ended December 31, 2010 \ 95,509 5,784 (2,398) 58,079 (40,551) \ 116,423
(5) Actuarial assumption used in retirement benefit obligation assessment are as follows (Unit: Korean Won in millions):
December 31, 2011 Discount rate Inflation rate Expected rate of return on plan assets Future wage growth rate Mortality ratio 4.76% 2.30% 4.49% 5.31% December 31, 2010 5.65% 3.20% 4.24% 5.74% January 1, 2010 5.31% 3.20% 5.67% 5.85%
Issued by Korea Insurance Development Institute
Expected rate of return on plan assets as of December 31, 2011, 2010 and January 1, 2010, which were considered with the expect rate of return on retirement pension, retirement trust and retirement insurances, are calculated as 4.49%, 4.24% and 5.67%, respectively.
(6) Details of plan assets are as follows (Unit: Korean Won in millions):
December 31, 2011 Deposits Equity securities Beneficiary certificates Others Total \ 131,081 5,257 49,480 26,618 \ 212,436 December 31, 2010 \ 70,939 3,975 27,209 14,300 \ 116,423 January 1, 2010 \ 27,453 12,669 23,293 32,094 \ 95,509
WOORI BANK

(7) The realized returns on plan assets for the year ended in December 31, 2011 and 2010 are \ 4,738 million and \ 3,386 million, respectively. (8) Details of retirement benefit obligation for recent 3 years are as follows (Unit: Korean Won in millions):
December 31, 2011 retirement benefit obligation recognized Present value of retirement benefit obligation Fair value of plan assets \ 22,227 234,663 \ (212,436) December 31, 2010 \ 23,116 139,539 \ (116,423) January 1,2010 \ 43,894 139,403 \ (95,509)
24. OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

Other financial liabilities and other liabilities are as follows (Unit: Korean Won in millions): December 31, 2011 Other financial liabilities: Accounts payable Accrued expenses Others Discount for others Borrowing from thrust accounts Deposits Agency business revenue Domestic exchanges payable Foreign exchanges payables Others on credit cards Agency and others Sub-total Other liabilities: Unearned income Other miscellaneous liabilities Sub-total Total 209,026 235,523 444,549 \ 16,791,518 196,454 81,303 277,757 \ 9,077,694 195,228 497,954 693,182 \ 9,122,263 \ 6,112,868 2,651,400 59,377 (3,195) 2,381,862 256,725 153,701 2,968,232 694,362 101,106 970,531 16,346,969 \ 1,999,398 2,188,579 55,603 (4,411) 1,984,695 264,225 218,343 96,834 580,354 101,163 1,315,154 8,799,937 \ 1,743,906 1,891,312 43,779 (2,290) 2,668,787 172,680 197,986 341,572 372,375 85,575 913,399 8,429,081
December 31, 2010
January 1, 2010
FINANCIAL REVIEW
25. DERIVATIVES
(1) Details of derivative assets and derivative liabilities are as follows(Unit: Korean Won in millions):
December 31, 2011 Assets Notional amount Interest rHate: Swaps Futures Long options Short options Currency: Forwards Swaps Futures Long options Short options Equity: Futures Long options Short options Others: Long options Short options Forwards Swaps Futures Total 234,408 239,000 10,516 157,938 300 \ 251,601,144 \ 326,413 \11,683 239 4,424 \ 3,360,383 \ 12,885 \ 12,697 11,793 253 4,926 \ 3,179,253 18,945 591,620 1,177,223 53,706 328,153 35,359,148 27,243,579 1,065,618 1,957,680 1,890,912 749,082 722,915 395,419 2,179 311,625 995,488 26,938 \ 176,139,868 298,253 2,445,000 2,771,136 \ 326,413 \\ 1,386,661 36,254 \ 12,885 \ 10,518 \ 1,469,153 30,924 Fair value hedge Cash flow hedge For trading Fair value hedge Liabilities Cash flow hedge For trading
December 31, 2010 Assets Notional amount Interest rate: Swaps Futures Long options Short options \ 204,633,092 31,020 4,225,000 5,076,534 \ 132,267 \ 957 \ 1,218,147 61,558 \ 23,725 \ 10,694 \ 1,328,003 43,398 Fair value hedge Cash flow hedge For trading Fair value hedge Liabilities Cash flow hedge For trading
WOORI BANK

December 31, 2010 Assets Notional amount Currency: Forwards Swaps Futures Long options Short options Equity: Futures Long options Short options Others:
Liabilities For trading Fair value hedge Cash flow hedge For trading
Fair value hedge
Cash flow hedge
27,404,892 24,884,530 870,966 2,360,647 2,295,334
865,796 838,787 420,078 -
373,681 1,014,073 57,214
46,249 396,246 1,243,991
39,279 -
357,859
Long options Short options Forwards Swaps Futures Total
87,081 87,615 198,378 312,150 295 \ 274,154,020
\ 132,267
\ 957
11,821 6,065 7,553 \ 3,469,084
\ 23,725
\ 10,694
11,925 5,496 9,744 \ 3,201,393
January 1, 2010 Assets Notional amount Interest rate: Swaps Futures Long options Short options Currency: Forwards Swaps Futures Long options Short options Equity: 34,357,927 19,640,707 668,498 3,049,897 3,198,520 1,357,750 721,377 598,523 603,985 1,324,687 111,492 \ 137,303,775 29,327 6,013,380 6,164,964 \ 104,986 \ 2,522 \ 1,099,587 76,513 \ 52,312 \ 12,285 \ 1,219,477 60,606 Fair value hedge Cash flow hedge For trading Fair value hedge Liabilities Cash flow hedge For trading
FINANCIAL REVIEW
January 1, 2010 Assets Notional amount Futures Long options Short options Others: Long options Short options Forwards Swaps Futures Total 304,145 312,065 82,213 875,694 5,752 \ 214,693,128 \ 104,986 \ 2,522 19,845 1,661 18,671 \ 3,941,265 \ 52,312 \ 12,285 22,949 1,246 221,602 \ 4,022,017 179,446 429,370 2,077,448 Fair value hedge Cash flow hedge For trading 47,338 Fair value hedge Liabilities Cash flow hedge For trading 455,973
The above disclosure includes all derivatives regardless of the financial instrument categories. Derivatives held for trading purpose classified into financial assets or liabilities at FVTPL (see notes 7 and 19) and derivatives for hedging are stated as a separate line item at the consolidated statements of financial position.
(2) Gains or losses on valuation of derivatives are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Loss from fair value hedged item Gain from fair value hedging instrument \ (195,534) 182,860 For the year ended December 31, 2010 \ (123,202) 79,042
26. DAY 1 PROFITS AND LOSSES

Changes in deferred day 1 profits and losses are as follows (Unit: Korean Won in millions): For the year ended December 31, 2011 Beginning balance New transactions Amounts recognized in profits or loss Ending balance \ 5,300 4,580 (5,310) \ 4,570 For the year ended December 31, 2010 \7,530 (2,230) \ 5,300
Although no observable elements were available in active market to determine fair value of the financial instruments, valuation techniques were utilized to determine fair value of such instruments. These financial instruments are recorded at fair values at the time of purchase even though there were differences noted on the transaction price and fair value obtained from valuation techniques. The table above shows the differences yet to be recognized in net income and the details.
WOORI BANK

27. CAPITAL STOCK, HYBRID SECURITIES AND CAPITAL SURPLUS

(1) Capital stock, hybrid securities and capital surplus are as follows (Unit: Korean Won in millions):
December 31, 2011 Capital Stock: Common Stock Preferred Stock Hybrid securities Capital Surplus: Capital in excess of par value Other capital surplus Total 346,880 465,136 \ 6,323,606 346,238 465,183 \ 6,823,010 346,880 465,113 \ 6,823,582 \ 3,479,783 350,000 1,681,807 \ 3,479,783 350,000 2,181,806 \ 3,479,783 350,000 2,181,806 December 31, 2010 January1, 2010
(2) The number of authorized shares is as follows (Unit: Korean Won in millions):
December 31, 2011 Authorized shares of capital stock
December 31, 2010 3,000,000,000 shares \ 5,000 765,956,580 shares
January1, 2010 3,000,000,000 shares \ 5,000 765,956,580 shares
166
3,000,000,000 shares \ 5,000 765,956,580 shares
Par value Issued shares of capital stock
(3) Hybrid securities classified as equity are as follows (Unit: Korean Won in millions):
Issue date Local currency Foreign currencies 2008. 6. 20. 2009. 3. 31. 2007. 5. 21. Maturity 2038. 6. 19. 2039. 3. 30. 2037. 5. 20. Interest Rates (%) 7.7 6.7 6.2 December 31, 2011 \ 254,633 499,998 927,176 \ 1,681,807 December 31, 2010 \ 254,633 999,997 927,176 \ 2,181,806 January 1, 2010 \ 254,633 999,997 927,176 \ 2,181,806
The Group can exercise its right to early repayment after five or ten years after issuing hybrid securities, and at the date of maturity, the contractual agreements allow the Group to indefinitely extend the maturity date with the same contractual terms. In addition, the Group decides not to pay the dividends of common share at general shareholder's meeting, the Group may not pay interest on the hybrid securities.
(4) Details of capital surplus are as follows (Unit: Korean Won in millions):
December 31, 2011 Capital in excess of par value Increase by issuance of preferred stock and common stock issue cost \ 346,880 December 31, 2010 \ 346,880 January1, 2010 \ 346,880
FINANCIAL REVIEW
December 31, 2011 Increase by acquisition of banking segment of formerly Peace Bank Gain on disposal of subsidiary stock (formerly Woori Investment Trust Management Co., Ltd.) Other capital surplus Loss on disposal of subsidiary stock (formerly Woori Investment Securities Co., Ltd.) Increase by merger with formerly Woori Investment Bank Co., Ltd. Increase by merger with formerly Woori Card Increase by additional acquisition of interests in P.T. Bank Woori Indonesia Sub-total Total 31,903 17,392 (55,369) 138,682 330,395 2,133 465,136 \ 812,016
December 31, 2010 31,903 17,392 (55,369) 138,682 330,395 1,538 464,541 \ 811,421
January1, 2010 31,903 17,392 (55,369) 138,682 330,395 2,110 465,113 \ 811,993
28. OTHER EQUITY

Changes in other equity are as follows (Unit: Korean Won in millions): For the year ended December 31, 2011 Beginning balance Gain (loss) on valuation of AFS financial assets Share of other comprehensive gain (loss) on associates Gain (loss) on valuation of cash flow hedge Gain (loss) on overseas business translation and others Total \ 939,938 20,857 (9,298) (13,237) \ 938,260 Others \ 100,304 (3,920) 7,617 15,818 \ 119,819 Reclassification \ (581,215) (24,788) (749) \ (606,752) Income tax effect \ 84,401 6,360 (3,703) \ 87,058 Ending balance \ 543,428 (1,491) (2,430) (1,122) \ 538,385
For the year ended December 31, 2010 Beginning balance Gain (loss) on valuation of AFS financial assets Share of other comprehensive gain (loss) on associates Gain (loss) on valuation of cash flow hedge \ 1,159,619 43,112 (10,468) Others \ 236,340 (28,532) 5,164 Reclassification \ (524,737) (3,994) Income tax effect \ 68,716 6,277 Ending balance \ 939,938 20,857 (9,298)
WOORI BANK

For the year ended December 31, 2010 Beginning balance Gain (loss) on overseas business translation and others Total \ 1,192,263 Others (14,535) \ 198,437 Reclassification \ (528,731) Income tax effect 1,298 \ 76,291 Ending balance (13,237) \ 938,260
For the change in gain (loss) on valuation of AFS financial assets, others represent the change from the valuation for the period, and reclassification adjustments show disposal or recognition of impairment losses on AFS financial assets.
29. RETAINED EARNINGS

Changes in retained earnings are as follows (Unit: Korean Won in millions): December 31, 2011 Legal reserve Legal Reserve Other legal reserve Sub-total
December 31, 2010 \ 1,094, 275 52,616 1,146,891 8,000 235,400 6,193,044 6,100 6,442,544 2,129,142 \ 9,718,577
January 1, 2010 \ 994,123 37,654 1,031,777 8,000 212,000 5,653,044 100 5,873,144 1,993,349 \ 8,898,270
\ 1,208,332 59,595 1,267,927 8,000 235,400 6,799,544 6,100 7,049,044 2,939,236 \ 11,256,207
Business rationalization reserve Reserve for financial structure improvement Additional reserve Other voluntary reserve Sub-total Retained earnings before appropriation Total
Voluntary Reserve
1) Legal reserve
In accordance with the Act of Banking Law, legal reserve are appropriated at least one tenth of the earnings after tax on every dividend declaration, not exceeding the paid in capital. This reserve may not be used other than for offsetting a deficit or transferring to capital.
2) Other legal reserve

Other legal reserves were appropriated in the branches located in Japan, Vietnam and Bangladesh according to the banking laws of Japan, Vietnam and Bangladesh, and may be used to offset any deficit incurred in those branches.
3) Business rationalization reserve

Pursuant to the Tax Exemption and Reduction Control Law, the Group was previously required to appropriate, as a reserve for business rationalization, amounts equal to tax reductions arising from tax exemptions and tax credits up to December 31, 2001. The requirement was no longer effective from 2002.
4) Reserve for financial structure improvement

In 2002, the Finance Supervisory Services recommended banks in Korea to appropriate at least ten percent of net income after accumulated deficit for
FINANCIAL REVIEW
financial structure improvement, until simple capital ratio equals 5.5 percent. This reserve is not available for payment of cash dividends; however, it can be used to reduce a deficit or be transferred to capital.
5) Reserve for research and human development

In accordance with the Tax Reduction and Exemption Control Act, the Group reserves tax reserves (reserve when taxable deduction under reporting adjustment during calculating income tax) when the Group dispose of retain earning. However, this reserve cannot allocate the amount of purchase return under related tax law.
6) Additional reserve and other voluntary reserve

Additional reserve and other voluntary reserve were appropriated for capital adequacy and other management purposes.
30. PLANNED REGULATORY RESERVE FOR CREDIT LOSS

In accordance with Article 29 of the Regulation on Supervision of Banking Business (RSBB), if the estimated provisions for credit loss under K-IFRS for the accounting purpose are lower than those in accordance with the provisions under RSBB, the Group shall disclose the difference as the planned regulatory reserve for credit loss.
(1) Balance of the planned regulatory reserve for credit losses is as follows (Unit: Korean Won in millions):
December 31, 2011 Beginning Amount estimated to be appropriated Ending \ 1,123,866 \ 1,123,866 December 31, 2010 \ 513,676 \ 513,676
(2) Planned reserves provided, adjusted net income after the planned reserves provided and adjusted earnings per share after the planned reserves provided are as follows (Unit: Korean Won in millions, except for earning per share):
For the year ended December 31, 2011 Planned reserves provided Adjusted net income after the planned reserves provided (*1) Adjusted Earnings per share after the planned reserves provided (*1) \ 610,190 1,459,182 \ 1,811
(*1) Adjusted net income after the planned reserves provided and adjusted earnings per share after the planned reserves provided are not in accordance with K-IFRS and calculated on the assumption that provision of regulatory reserve for credit loss before income tax is adjusted to the profit.
WOORI BANK

31. DIVIDENDS
Details of dividends and payout ratio are as follows (Unit: Korean Won in millions): For the year ended December 31, 2011 Common stock Shares outstanding (million) Par value per share Capital stock (million) Number of shares issued (million) Cash dividend per share Total cash dividend (million) Dividend rate Net income (million) Payout ratio (*2)
For the year ended December 31, 2010 Common stock 696 \ 5,000 3,479,783 696 \ 477 331,725 9.5% 1,262,104 .26.3% Preferred Stock (*1) 70 \ 5,000 350,000 70 \ 800 56,000 16.0% 1,262,104 4.4%
Preferred Stock (*1) 70 \ 5,000 350,000 70 \ 800 56,000 16.0% 2,069,371 2.7%
696 \ 5,000 3,479,783 696 \ 608 423,053 12.2% 2,069,371 20.4%
(*1) Preferred stock is non-cumulative and non-participating and its dividend rate is 8% on issuance price per share. (*2) Payout ratio for the year ended December 31, 2010 is calculated in accordance with K-IFRS and payout ratio of common stock and preferred stock under K-GAAP for the year ended December 31, 2010 were 29.9% and 5.1%, respectively. In addition, payout ratio of common stock and preferred stock after reflecting planned regulatory reserve for credit loss for the year ended December 31, 2011 are 29.0% and 3.8%, respectively.
32. NET INTEREST INCOME

(1) Details of interest income recognized are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Financial asset at FVTPL: Interest of securities: Securities in local currency Securities in foreign currencies Interest of other assets Sub-total AFS financial asset: Interest of securities in local currency: Interest of government bonds Interest of finance debentures Interest of debentures Interest of beneficiary certificate Interest of other securities 142,463 124,349 42,479 712 1 124,031 133,856 18,463 891 \ 196,756 89,824 286,580 \ 203,565 1,090 79,777 284,432 For the year ended December 31, 2010
FINANCIAL REVIEW
For the year ended December 31, 2011 Interest of securities in foreign currencies Sub-total HTM financial asset: Interest of securities in local currency: Interest of government bonds Interest of finance debentures Interest of debentures Others Interest of securities in foreign currencies Sub-total Loans and receivables: Interest on due from banks: Interest on due from banks in local currency Interest on due from banks in foreign currencies Interest of loans: Interest on loans in local currency Interest on loans in foreign currencies Interest on domestic usance bills Interest on off-shore loans Interest on inter-bank loans Interest on call loans Interest on bills bought Interest on foreign currencies Interest on payment for acceptances and guarantees Interest on bonds sold under repurchase agreements Interest on privately placed bonds Interest on credit card receivables Interest on other loans Interest of other assets Sub-total Total 8,218,926 438,327 49,049 497 58,084 87,756 14,160 120,677 4,292 100,061 119,723 996,012 39,350 99,111 10,393,277 \ 11,659,258 29,136 18,116 232,601 225,033 197,288 709 8,305 663,936 5,461 315,465
For the year ended December 31, 2010 7,641 284,882
146,243 364,898 89,714 10,568 611,423
4,070 8,364
7,642,649 465,369 46,040 1,234 24,880 79,993 8,318 145,265 3,311 58,119 163,199 1,007,690 40,315 101,495 9,800,311 \ 10,981,048
Interest income accrued from impaired loan is \140,933 million and \62,257 million for the years ended December 31, 2011 and 2010, respectively.
WOORI BANK

(2) Interest expense recognized are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Interest of deposits: Interest on demand deposits in local currency Interest on deposits in foreign currencies Interest on saving deposits in local currency Interest on mutual installment Interest on money trust Interest on certificate of deposits Interest on other deposits Sub-total Interest of borrowings: Interest on borrowings in local currency Interest on borrowings in foreign currencies
For the year ended December 31, 2010
\ 20,116 33 4,121,885 3,590 64,966 175,043 91,210 4,476,843
\ 13,044 33 3,750,353 4,726 279,814 121,560 81,645 4,251,175
148,255 115,342 57,627 19,992 2,582 343,798
172,634 105,731 45,795 13,227 2,320 339,707
Interest on call money Interest on bills sold Interest on bonds sold under repurchase agreements Sub-total Interest of debentures: Interest on debentures in local currency Interest on debentures in foreign currencies Sub-total Others Total
791,917 223,042 1,014,959 98,062 \ 5,933,662
976,662 282,629 1,259,291 104,113 \ 5,954,286
33. NET FEES AND COMMISSIONS INCOME

(1) Details of fees and commissions income occurred are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Commission received: Commission received in local currency Commission received in foreign currencies Sub-total Commission fees \ 501,697 201,230 702,927 97,386 \ 448,127 193,402 641,529 100,354 For the year ended December 31, 2010
FINANCIAL REVIEW
For the year ended December 31, 2011 Commission received on project financing Commission received on credit card: Credit card in local currency Credit card in foreign currencies Prepaid card Debit card Sub-total CMA management charges Commission received on securities Other commission received Commission received on trust business Total 12,800 21,113 1,375 777 36,065 5,553 71,688 20,688 36,775 \ 993,929 22,847
For the year ended December 31, 2010 15,544
10,899 1,903 569 13,371 6,131 92,027 23,049 39,525 \ 931,530
(2) Details of fees and commissions expense occurred are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Commission expenses: Commission expenses in local currency Commission expenses in foreign currencies Sub-total Commission expenses on credit card: Credit card in local currency Credit card in foreign currencies Debit card Sub-total Commission expenses on securities Commission expenses on brand loyalty Commission expenses on trust business Total 337,794 2,715 771 341,280 140 58,065 1,822 \ 485,938 324,179 3,392 527 328,098 580 32,408 1,264 \ 437,737 \ 61,909 22,722 84,631 \ 55,780 19,607 75,387 For the year ended December 31, 2010
WOORI BANK

34. DIVIDEND INCOME

Details of dividend income recognized are as follows (Unit: Korean Won in millions): For the year ended December 31, 2011 Financial assets at FVTPL: Dividend income in local currency AFS financial assets: Dividend in local currency Dividend in foreign currencies Sub-total Total 111,595 4,071 115,666 \ 123,150 113,088 2,187 115,275 \ 119,095 \ 7,484 \ 3,820 For the year ended December 31, 2010
35. GAINS AND LOSSES ON FINANCIAL ASSETS AT FVTPL

(1) Details of gains and losses on financial assets at FVTPL are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Gains and losses on financial assets held for trading Gains and losses of financial assets designated at FVTPL Total \ 78,797 27,885 \ 106,682 For the year ended December 31, 2010 \ 58,089 (42,876) \ 15,213
(2) Details of gains and losses on financial assets held for trading are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Gain (loss) on securities: Gain on retirement of securities in local currency Loss on retirement of securities in local currency Sub-total Gain on transaction of securities in local currency Loss on transaction of securities in local currency Sub-total Gain on valuation of securities in local currency Loss on valuation of securities in local currency Sub-total Gain (loss) on securities sub-total Gain (loss) on derivatives (for trading): Gain on transaction and valuation of derivatives: \1 (29) (28) 57,301 (109,119) (51,818) 15,598 (18,559) (2,961) (54,807) \ 624 (11) 613 145,397 (54,616) 90,781 39,626 (1,990) 37,636 129,030 For the year ended December 31, 2010
FINANCIAL REVIEW
For the year ended December 31, 2011 Gain on interest rates derivatives Loss on interest rates derivatives Sub-total Gain on currencies derivatives Loss on currencies derivatives Sub-total Gain on equity derivatives Loss on equity derivatives Sub-total Gain on other derivatives Loss on other derivatives Sub-total Gain (loss) on derivatives sub-total Gain (loss) on other financial instruments: Gain on transaction of other financial instruments Loss on transaction of other financial instruments Sub-total Gain on valuation of other financial instruments Loss on valuation of other financial instruments Sub-total Gain on other financial instruments sub-total Total 8,464 (2,130) 6,334 416 (2) 414 6,748 \ 78,797 1,843,855 (1,841,678) 2,177 3,556,354 (3,470,563) 85,791 176,187 (139,137) 37,050 83,429 (81,591) 1,838 126,856
For the year ended December 31, 2010 2,040,078 (2,130,406) (90,328) 3,850,443 (3,796,031) 54,412 221,787 (273,846) (52,059) 206,790 (203,172) 3,618 (84,357)
11,936 (1,270) 10,666 2,750 2,750 13,416 \ 58,089
(3) Details of gains and losses of financial instrument at FVTPL are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Gain on transaction of securities: Loss on redemption of securities in foreign currencies Gain on transaction of securities in local currency Gain on transaction of securities in foreign currencies Sub-total Gain (loss) on other financial instruments: Gain on disposition of other financial instruments Gain (loss) on valuation of other financial instruments Sub-total Total 18,861 9,024 27,885 \ 27,885 2,516 (45,942) (43,426) \ (42,876) \\ (589) 15 1,124 550 For the year ended December 31, 2010
WOORI BANK

36. GAINS AND LOSSES ON AFS FINANCIAL ASSETS

Details of gains and losses on AFS financial assets recognized are as follows (Unit: Korean Won in millions): For the year ended December 31, 2011 Gain on transaction of securities: Gain on redemption of securities in local currency Gain on redemption of securities in foreign currencies Gain on transaction of securities in local currency Gain on transaction of securities in foreign currencies Sub-total Reversal of impairment loss (Impairment loss): Securities in local currency Securities in foreign currencies Sub-total Total
For the year ended December 31, 2010
\ 72 1,194,274 5,715 1,200,061
\ 99 2,035 960,944 17,340 980,418
(163,529) (19,786) (183,315) \ 1,016,746
30,101 (31,973) (1,872) \ 978,546
37. GAIN (LOSS) ON HTM FINANCIAL ASSETS

There is no gain or loss on HTM financial assets for the years ended December 31, 2011 and 2010, respectively. In addition, details of interest income of HTM financial assets are stated in note 32.
38. IMPAIRMENT LOSSES FOR LOANS, OTHER RECEIVABLES, GUARANTEES AND UNUSED COMMITMENTS
Impairment losses for loans, other receivables, guarantees and unused commitments are as follows (Unit: Korean Won in millions): For the year ended December 31, 2011 Loans: Bad debt expenses Reversal of provision for loan losses and receivables Sub-total Guarantees: Provision for guarantee Reversal of provision for guarantee Sub-total Commitments: Provision for unused commitment (2,391) (4,027) (147,120) 5,251 (141,869) (194,166) 167,794 (26,372) \ (1,787,955) 77,302 (1,710,653) \ (2,625,672) 136,029 (2,489,643) For the year ended December 31, 2010
FINANCIAL REVIEW
For the year ended December 31, 2011 Reversal of provision for unused commitment Sub-total 38,310 35,919 \ (1,816,603)
For the year ended December 31, 2010 23,959 19,932 \ (2,496,083)
39. GENERAL AND ADMINISTRATIVE EXPENSES AND NET OTHER OPERATING INCOME (EXPENSE)
(1) Details of general and administrative expenses are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Salaries Short-term salaries Severance benefits-defined benefit Severance benefits- defined contribution Termination Sub-total Depreciation Employee benefits Reimburse Travel Operating promotion expenses Rent Maintenance Advertising expenses Taxes and dues Other general and administrative expenses Insurance Computer related expenses Service fees Communications Printings Water, light and heating Supplies Vehicle maintenance Other expenses Others Sub-total Total \ 1,044,031 100,582 2,439 42,907 1,189,959 126,740 259,620 61,198 6,815 42,245 187,020 12,004 69,632 109,188 3,108 245,111 163,277 32,905 10,901 13,192 6,025 9,479 134 4,240 1,236,094 \ 2,552,793 For the year ended December 31, 2010 \ 870,098 81,162 32,019 983,279 125,682 239,841 61,885 6,192 36,460 178,751 9,966 70,457 100,027 3,127 245,788 130,332 28,939 11,293 13,477 5,975 8,184 517 3,334 1,154,545 \ 2,263,506
WOORI BANK

(2) Details of net other operating incomes (expenses) recognized are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Other operating incomes Other operation expenses Net other operating expenses \ 8,545,805 (8,973,490) \ (427,685) For the year ended December 31, 2010 \ 7,725,743 (8,101,934) \ (376,191)
(3) Details of other operating incomes recognized are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Gain on transaction of foreign exchange Gain on derivatives (for hedge) Gain on fair value hedging derivatives Rental incomes Gain on transaction of other assets Reversal of impairment of other assets Gain on restoration
For the year ended December 31, 2010 \ 7,358,105 129,755 40,575 16,662 357 966 33 120,087 59,203 \ 7,725,743
\ 8,104,932 193,374 4,921 19,168 65,166 321 105 51,910 26,231 79,677 \ 8,545,805
Gain on disposal of loans Gain on investment in associates Others
(4) Details of other operating expenses recognized are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Loss on transaction of foreign exchange Loss on derivatives (for hedge) Loss on fair value hedging derivatives Deposit insurance premium Contribution to miscellaneous funds Export bond insurance fees Loss on disposition of other assets Loss on valuation of other assets Donations and contributions Loss on restoration Loss on disposal of loans Loss on investment in associates Other expenses \ 7,955,322 10,513 200,455 207,991 298,685 95 2,675 4,614 38,041 301 196,187 58,611 \ 8,973,490 For the year ended December 31, 2010 \ 7,109,106 50,713 163,777 179,017 285,720 5 4,526 8,530 62,896 244 172,263 6 65,131 \ 8,101,934
FINANCIAL REVIEW
40. INCOME TAX EXPENSE

(1) Details of income tax expense are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Current income tax payable Adjustment recognized in the period for current tax of prior periods Changes in deferred income taxes due to temporary differences Changes in deferred income taxes directly in equity Income tax expense \ 489,483 (4,796) 18,055 87,058 \ 589,800 For the year ended December 31, 2010 \ 260,792 (38,041) (24,293) 76,291 \ 274,749
(2) Income tax expense can be reconciled to net income is follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Net income before income tax Tax calculated at statutory tax rate of 24.2% Adjustments: Effect on non-taxable income Effect on non-deductible expense Deferred tax effect from changes in tax rate Consolidated tax return Adjustment recognized in the period for current tax of prior periods Income tax expense Effective tax rate \ 2,659,171 643,493 (46,060) 53,980 (11,618) (45,199) (4,796) \ 589,800 22.2% For the year ended December 31, 2010 \ 1,536,853 371,892 (79,149) 61,427 (8,998) (32,382) (38,041) \ 274,749 17.9%
(3) Changes in cumulative temporary differences for the years ended December 31, 2011 and 2010 are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Beginning balance Temporary differences to be charged to income tax expense: Loss (gain) on valuation of securities Loss (gain) on valuation of investments in associates Gain (loss) on valuation of derivatives Accrued income Depreciation of premises and equipment Allowance for loan loss Write-off of loans \ 647,632 156,832 (466,258) (206,975) (33,082) 344,333 258,253 \ 651,462 (466,615) (205,174) (33,307) 383,663 220,660 \ 884,836 (52,477) (641,807) (265,594) (17,752) (31,593) \ 881,006 104,355 (641,450) (267,395) (17,527) (70,923) 37,593 Deduction Addition Ending balance
WOORI BANK

For the year ended December 31, 2011 Beginning balance Deferred loan origination fees and costs Accrued expenses Retirement benefit obligation Plan assets Provisions for guarantees Other provision Loss (gain) on valuation of debentures Deposits due to customers Provision for advanced depreciation Hybrid securities Others Sub-total Temporary differences recognized directly in equity : Gain on valuation of available-for-sale securities Change in interests of equity method securities Others Sub-total Temporary differences sub-total Realizable temporary differences Unrealizable temporary differences Tax effects for temporary differences Net deferred tax liabilities (1,171,131) (26,739) 695 (1,197,175) (2,856,406) (2,389,873) (466,533) (99,142) \ (99,142) (1,189,356) (26,739) 695 (1,215,400) (1,232,443) (500,000) (732,443) (161,665) (744,263) 1,946 (4,315) (746,632) (737,657) 5,168 (742,825) (179,720) (726,038) 1,946 (4,315) (728,407) (2,361,620) (1,884,705) (476,915) (117,197) \ (117,197)
Deduction (125,558) 105,388 3,640 (3,640) 202,719 195,340 159,721 6,249 (500,000) (611,591) (17,043)
Addition (155,002) 161,829 80,814 (76,644) 250,472 137,257 312,819 119 (578,302) 8,975
Ending balance (155,002) 165,605 177,527 (177,527) 250,472 137,341 312,819 119 (86,274) (1,889,873) (394,079) (1,633,213)
(125,558) 109,164 100,353 (104,523) 202,719 195,424 159,721 6,249 (86,274) (2,389,873) (427,368) (1,659,231)
For the year ended December 31, 2010 Beginning balance Temporary differences to be charged to income tax expense: Loss (gain) on valuation of securities Loss (gain) on valuation of investments in associates Gain (loss) on valuation of derivatives Accrued income Depreciation of premises and equipment Allowance for loan loss Write-off of loans Deferred loan origination fees and costs Accrued expenses \ 687,700 165,579 (41,896) (58,772) (90,730) (609,864) 278,872 (113,002) (94,197) \ 687,700 165,579 (41,896) (58,772) (90,905) (469,009) 20,619 (113,002) (94,197) \ 647,632 156,832 (466,258) (206,975) (33,257) 485,188 (125,558) 109,164 \ 647,632 156,832 (466,258) (206,975) (33,082) 344,333 258,253 (125,558) 109,164 Deduction Addition Ending balance
FINANCIAL REVIEW
For the year ended December 31, 2010 Beginning balance Retirement benefit obligation Plan assets Provisions for guarantees Other provision Loss (gain) on valuation of debentures Deposits due to customers Provision for advanced depreciation Hybrid securities Others Sub-total Temporary differences recognized directly in equity: Gain on valuation of available-for-sale securities Change in interests of equity method securities Others Sub-total Temporary differences sub-total Realizable temporary differences Unrealizable temporary differences Tax effects for temporary differences Net deferred tax liabilities (1,488,686) (55,272) (1,543,958) (3,129,287) (2,504,972) (624,315) (123,435) \ (123,435) (1,488,686) (55,272) (1,543,958) (3,156,346) (2,504,972) (651,374) (132,883) (1,171,131) (26,739) 695 (1,197,175) (2,883,465) (2,389,873) (493,592) (108,590) (1,171,131) (26,739) 695 (1,197,175) (2,856,406) (2,389,873) (466,533) (99,142) \ (99,142) 97,155 (96,402) 334,500 227,619 (3,228) 761 (86,274) (2,504,972) 321,822 (1,585,329) Deduction 96,250 (95,496) 334,500 227,552 (3,228) 761 (2,504,972) 326,128 (1,612,388) Addition 99,448 (103,617) 202,719 195,357 159,721 6,249 (2,389,873) (423,062) (1,686,290) Ending balance 100,353 (104,523) 202,719 195,424 159,721 6,249 (86,274) (2,389,873) (427,368) (1,659,231)
(4) Details of temporary differences that are not recognized as deferred tax liabilities are as follows (Unit: Korean Won in millions):
December 31, 2011 Investments in associates Hybrid securities Total \ 5,168 (1,889,873) \ (1,884,705) December 31, 2010 \(2,389,873) \ (2,389,873) January 1, 2010 \(2,504,972) \ (2,504,972)
(5) Details of deferred tax relating to items that are recognized directly in equity are as follows (Unit: Korean Won in millions):
December 31, 2011 Loss (gain) on valuation of AFS securities Gain (loss) on foreign exchange translation of AFS financial assets Others Total \ (172,677) (1,011) (2,633) \ (176,321) December 31, 2010 \ (257,079) (1,010) (5,290) \ (263,379) January 1, 2010 \ (317,150) (9,655) (12,865) \ (339,670)
WOORI BANK

41. EARNINGS PER SHARE (EPS)

(1) Basic EPS is calculated by dividing net income by weighted average number of common shares outstanding (Unit: Korean Won in millions, except for per share amounts)
For the year ended December 31, 2011 Net income attributable to common shares: Net income attributable to the controlling equity Dividend on preferred stock Dividend on hybrid securities \ 2,068,544 (56,000) (142,548) \ 1,869,996 Weighted average number of common shares outstanding Basic EPS 696 million shares \ 2,687 \ 1,261,283 (56,000) (155,661) \ 1,049,622 696 million shares \ 1,508 For the year ended December 31, 2010
(2) Diluted EPS is calculated by reflecting the dilution effect to net income (Unit: Korean Won in millions, except for per share amounts)
For the year ended December 31, 2011 Diluted net income: Net income attributable on common shares Dilutioneffect ofconvertible preferred stock \ 1,869,996 56,000 \ 1,925,996 Weighted average number of share for diluted earnings per share: Weighted average number of common shares outstanding Convertible preferred stock 696 million shares 70 million shares 766 million shares Diluted EPS \ 2,514 696 million shares 70 million shares 766 million shares \ 1,443 \ 1,049,622 56,000 \ 1,105,622 For the year ended December 31, 2010
Diluted EPS is calculated by adjusting the assumption that all dilutive potential common shares are converted to common shares, for weighted average number of shares calculation. The dilutive potential common shares are convertible preferred stock, and to calculate diluted EPS, it is assumed that convertible preferred stocks convert to common shares and the relate dividend is added to net income on common shares.
FINANCIAL REVIEW
42. CONTINGENT LIABILITIES AND COMMITMENTS

(1) Details of guarantee which the Group has provided for others are as follows (Unit: Korean Won in millions):
December 31, 2011 Confirmed guarantee: Guarantee for debenture issuances Guarantee for loans Acceptances Guarantee in acceptances of imported goods Other confirmed guarantees Total Unconfirmed guarantee: Local letter of credit Letter of credit Other unconfirmed guarantee Total Commercial paper purchase commitment and others 934,060 4,490,294 3,133,110 \ 8,557,464 \ 2,956,081 880,013 5,293,892 3,678,567 \ 9,852,472 \ 4,028,455 728,597 5,431,537 4,709,636 \ 10,869,770 \ 3,626,291 \ 135 220,966 807,772 128,152 9,845,755 11,002,780 \ 41,290 128,433 743,445 124,973 8,532,312 9,570,453 \ 46,024 84,137 817,770 113,564 8,953,173 10,014,668 December 31, 2010 January 1, 2010
(2) Details of loan commitments and other commitments which the Group provided for others are as follows (Unit: Korean Won in millions):
December 31, 2011 Loan commitments Other commitments \ 84,708,979 8,695,936 December 31, 2010 \ 79,895,333 9,929,244 January 1, 2010 \ 74,519,965 8,776,416
(3) Details of guarantees and the related provisions for guarantees are as follows (Unit: Korean Won in millions):
December 31, 2011 Confirmed guarantees Unconfirmed guarantees Commercial paper purchase commitments and others Total Provisions for guarantees Ratio of provisions to total guarantees \ 11,002,780 8,557,464 2,956,081 22,516,325 \ 437,557 1.94% December 31, 2010 \ 9,570,453 9,852,472 4,028,455 23,451,380 \ 284,599 1.21% January 1, 2010 \ 10,014,668 10,869,770 3,626,291 24,510,729 \ 278,191 1.13%
WOORI BANK

(4) Litigation case

The Group had filed lawsuits as follows (Unit: Korean Won in millions): December 31, 2011 As plaintiff Number of cases Amount of litigation Provisions for litigations 779 case \ 1,020,035 As defendant 179 case \ 333,177 \ 12,679
December 31, 2010 As plaintiff Number of cases Amount of litigation Provisions for litigations
As defendant 146 case \ 160,427 \ 13,941
4,034 case \ 788,273
January 1, 2010 As plaintiff Number of cases Amount of litigation Provisions for litigations 4,860 case \ 781,854 As defendant 210 case \ 178,618 \ 17,424
The litigations from the electronic reminder (payment orders for unpaid credit card receivables to individuals) are not included on the number of cases as of December 31, 2011, December 31, 2010 and January 1, 2010, respectively, and there are no significant effects on the financial statements as of December 31, 2011, December 31, 2010 and January 1, 2010.
43. RELATED PARTY TRANSACTIONS

Related parties of Group and assets and liabilities recognized and major transactions with related parties during the current and prior period are as follows:
(1) The related parties of the Group as of December 31, 2011 are as follows:
Related parties Ultimate controlling party (Government related entity) Parent Associates Korea Deposit Insurance Corporation (KDIC) Woori Finance Holdings Co., Ltd. (WFH) Korea Credit Bureau Co., Ltd., Korea Finance Security Co., Ltd., Woori Service Networks Co., Ltd., Kumho Tires Co., Ltd., Woori Private Equity Fund, Woori Blackstone Korea Opportunity Private Equity Fund 1, United PF 1st Corporate financial stability, LIG E&C Co., Ltd., Hyunjin Co., Ltd.
FINANCIAL REVIEW
Other
Kyongnam Bank, Kyongnam Bank Preservation Trust of principal, Kwangju Bank, Kwangju Bank Preservation Trust of principal, Kumho Investment Bank, Bonghwang Semiconductor Yuhan Gongsa, Sempio Food Co., Ltd., Seoul Lakeside Co., Ltd., WFG Savings Bank, Woori FIS Co., Ltd., Woori Renaissance Holdings Co., Ltd., Woori Futures, Woori Aviva Life Insurance Co., Ltd., Woori AMC, Woori F&I Co., Ltd., Woori EL Co., Ltd., Woori Asset Management Co., Ltd., Woori Investment & Securities Co., Ltd., Woori Financial Co., Ltd., Woori Private Equity, UP Chemical Co., Ltd., Phoenix Digital Tech Co., Ltd., TY Second Asset Securitization Specialty and 54 SPCs, Woori Investment Asia PTE and 35 Beneficiary Certificates
(2) Assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):
Related party Ultimate controlling party (Government related entity) KDIC Accounts Loans Provision for credit loss Other assets Deposits Parent Loans Provision for credit loss WFH Other assets Deposits Other liabilities Associates Loans Provision for credit loss Kumho Tires Co., Ltd. Other assets Other liabilities Deposits Loans BC Card Co., Ltd. Provision for credit loss Deposits Other liabilities Loans Korea Credit Bureau Co., Ltd. Provision for credit loss Deposits Other liabilities Other assets Woori Private Equity Fund Deposits Other liabilities December 31, 2011 \ 1,000,000 457 762,109 136,916 483 2 38,745 238,721 422,840 (51,468) 381 57 36,131 3 3,000 53 12,377 December 31, 2010 \647,300 546,634 369 (1) 68,954 32,542 403,829 (48,287) 33,964 (122) 18,650 50 2 3,800 102 20 2,168 1 January1, 2010 \222,283 230,935 246 (2) 24,570 31,580 26,514 (4,607) 10,193 43 3 (1) 21 789 -
WOORI BANK

Related party
Accounts Loans Korea Finance Security Co., Ltd. Provision for credit loss Deposits Other liabilities Loans Woori Service Networks Co., Ltd. Provision for credit loss Deposits Other liabilities United PF 1 corporate financial stability
st
December 31, 2011 45 (1) 2,638 23 20 (1) 1,457 201 2 742 (70) 2,408 47 313 (313) 17,477 233 \1,822 (342) 8,141 794,100 13,454 143,195 42,722 5,739 1,409 36,741 229 27,908 8,605 28,418 11,770
December 31, 2010 47 (9) 1,090 19 (4) 1,080 179 \ 2,867 402,705 9,784 154,695 1,579 36,997 3,778 3,589 113,487 2,925 2,292 11,961 26,880 29,646
January1, 2010 40 (13) 42 (21) 820 13 \ 11,842 1,171 (29) 598 352,832 28,070 71,812 43,223 12,047 8,304 74,473 3,093 5,233 26,386 45,898
Deposits Loans
LIG E&C Co., Ltd.

Provision for credit loss Deposits Other liabilities Other assets
Hyunjin Co., Ltd.
Provision for credit loss Deposits Other liabilities
Others
Due from Banks Loans Woori Investment & Securities Co., Ltd. and subsidiaries Provision for credit loss Other assets Deposits Borrowings Other liabilities Due from banks Other assets Kyongnam Bank and subsidiaries Deposits Borrowings Other liabilities Loans Due from banks Kwangju Bank Other assets Deposits Borrowings Other liabilities
FINANCIAL REVIEW
Related party
Accounts Loans Provision for credit loss Woori F&I Co., Ltd. and subsidiaries Other assets Deposits Other liabilities
December 31, 2011 69 (1) 96 89,301 403
December 31, 2010 5 73,307 199
January1, 2010 1,354 (233) 797 32,207 232
Loans Provision for credit loss Woori Private Equity and subsidiaries Other assets Deposits Borrowings Other liabilities Due from banks Other subsidiaries of WFH Loans Provision for credit loss Other assets Deposits Other liabilities Associates of Woori F&I Co., Ltd. Deposits Other liabilities Loans Associates of Woori Private Equity Provision for credit loss Deposits Other liabilities Loans Associates of Woori Investment & Securities Co., Ltd. Provision for credit loss Deposits Other liabilities Loans Woori Aviva Life Insurance Co., Ltd. Provision for credit loss Deposits Other liabilities
20,054 (164) 10,457 19,301 1,000 15,577 50,510 (230) 84 30,202 18,823 27,508 14 15,777 (3,716) 6,707 22 11,300 (17) 9,292 14 371 (3) 2,642 690
20,133 (92) 4,442 35,180 6,624 12,017 1,035 639 (8) 1,198 29,694 21,645 41,476 14 7,358 1,834 74 4,392 59 348 7,638 136
20,155 (85) 5,118 39,922 6,791 6,329 349 (105) 354 23,544 22,188 4,857 (2,426) 56,588 966 96 (1) 3,996 18 243 (243) 480 803
WOORI BANK

(3) Gain or loss from transactions with related parties are as follows (Unit: Korean Won in millions):
Related party Ultimate controlling party (Government related entity) Parent Accounts Interest income KDIC Interest expense Bad debt expense Other income Interest expense WFH Fees expense Bad debt expenses Other expense Associates Kumho Tires Co., Ltd. Interest income Fees income Interest expense Fees expense
For the year ended December 31, 2011 \ 63,186 7,218 457 2,066 7,184 52,751 100 1,036 1 58 4 3,180 55 60 (9) 65 12 14 31 (3) 14 (80,992)
For the year ended December 31, 2010 \ 14,639 9,533 740 2,735 29,461 1 (27,747) 55 57 2 135 2 13 29 (4) 434 41 18 32,267 1 483 66 (4,727) -
Bad debt expenses (Reversal of provision for credit loss) Dividends Korea Finance Security Co., Ltd. Interest expense Bad debt expenses (Reversal of provision for credit loss) Korea Credit Bureau Co., Ltd. Interest expense Dividends Woori Service Networks Co., Ltd. Other income Interest expense Bad debt expenses Dividends Woori Private Equity Fund and subsidiaries Fees income Interest expense Dividends Fees income BC Card Co., Ltd. Interest expense Fees expenses Reversal of provision for credit loss United PF 1 corporate financial stability
st
Other expense
FINANCIAL REVIEW
Related party
Accounts Interest income Fees income LIG E&C Co., Ltd. Reversal of provision for credit loss Interest expense Fees expenses
For the year ended December 31, 2011 55 2 (360) 111 6 For the year ended December 31, 2011 \ 374 4 (388) 4 689 648 1,815 8,628 822 134 227 214,536 24,203 63 18,352 17 12,411 1,386 414 336 4,895 1,299 1,918 707 11 72 1,512
For the year ended December 31, 2010 For the year ended December 31, 2010 \1,485 6,663 697 168 (40) 214,940 37,780 158 41,209 1 4,001 18,943 147 5 23,717 326 1,107 1,134 8 9,760
Related party Associates
Accounts Interest income Fees income Hyunjin Co., Ltd. Reversal of provision for credit loss Other income Interest expense
Others
Interest income Fees income Other income Other subsidiaries of WFH Interest expense Fees expense Bad debt expenses Other expense Other income Kyongnam Bank and subsidiaries Interest expense Other expense Interest income Fees income Other income Woori Investment & Securities Co., Ltd. and subsidiaries Interest expense Fees expense Bad debt expenses Other expense Interest income Other income Woori Private Equity and subsidiaries Interest expense Fees expense Bad debt expenses Other expense
WOORI BANK

Related party
Accounts Interest income Kwangju Bank Other income Interest expense Other expense Fees income Other income Woori F&I Co., Ltd. and subsidiaries Interest expense Bad debt expenses Other expense Associates of Woori F&I Co., Ltd. Associates of Woori Private Equity Interest expense Interest expense Bad debt expenses
For the year ended December 31, 2011 3 1,972 967 1,027 53 193 996 1 315 332 142 3,716 For the year ended December 31, 2011 17 126 14,893 135 13 25 3
For the year ended December 31, 2010 48 968 2,520 55 106 366 234 291 777 5,550 For the year ended December 31, 2010 (1) 132 13,088 155 26 67
190
Related party Associates of Woori Investment & Securities Co., Ltd.
Accounts Bad debt expenses (Reversal of provision for credit loss) Interest expense Fees income Other income Woori Aviva Life Insurance Co., Ltd. Interest expense Fees expense Bad debt expenses
(4) Guarantees provided to the related parties are as follows (Unit: Korean Won in millions):
Warranty Kumho Tires Co., Ltd. TY Second Asset Securitization Specialty Import credit in foreign currencies Confirmed guarantees (Guarantee for debenture issuances) Loan commitment in local currency Sempio Food Co., Ltd. BK LCD Co., Ltd. Hyunjin Co., Ltd. Import credit in foreign currencies Financial guarantee in foreign currencies Import credit in foreign currencies Confirmed guarantees December 31, 2011 \ 18,091 65 119,000 575 287 December 31, 2010 \ 15,889 65 119,000 1,802 1,708 305 January1, 2010 \ 2,054 65 119,000 744 584 579 -
For the guarantee provided to the related parties, the Group recognized provisions for guarantees amounting to \514 million, \1,214 million and \1,242 million, respectively, as of December 31, 2011 and 2010 and January 1, 2010.
FINANCIAL REVIEW
(5) Details of compensation to key management are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2011 Salaries Severance and retirement benefits \ 1,330 160 For the year ended December 31, 2010 \ 1,131 127
The key management represents non-executive directors and executive director. As of December 31, 2011 and 2010 and January 1, 2010, loans from transactions with key management are \700 million, \720 million and \770 million, respectively. And allowance for these loans and bad debt expense are \1 million.
44. OPERATING INCOME (EXPENSE)

The items reclassified from non-operating income or expense under K-GAAP to operating incomes or expenses under K-IFRS are as follows. (Unit: Korean Won in millions) For the year ended December 31, 2011 Operating income in K-IFRS Adjustments: Gain (loss) on disposal and impairment of premises and equipment and intangible assets Gain (loss) on transaction of investment in associates Debt collection fee Donations Other (miscellaneous profit and loss) Sub-total Operating income in previous GAAP (4,085) (26,231) 8,612 38,041 (95,522) (79,185) \ 2,603,899 11,733 6 2,231 62,896 (13,173) 63,693 \ 1,561,322 \ 2,683,084 For the year ended December 31, 2010 \ 1,497,629
The above information reflects only the differences in the classifications of income and expense between K-IFRS and K-GAAP. And, it was measured by current standards, which is K-IFRS. As such, the operating income for the year ended December 31, 2010, is not same as reported operating income under K-GAAP.
45. CREDIT CARD DIVISION SPLIT-OFF PLAN

As of September 16, 2011, the board of directors of WFH and the Group decide to split off the Banks credit card division and set up a new credit card company to be a subsidiary of WFH. The Bank will disclose its credit card division as a discontinued operation when the Financial Supervisory Committee approves the split off and the establishment of the new credit card company.
WOORI BANK

46. TRANSITION EFFECTS OF K-IFRS

In connection with adopting K-IFRS, the effects on the Groups financial position, result of its operation due to the adoption of K-IFRS are as follows:
(1) Significant differences on accounting policies between K-IFRS and K-GAAP

Classification Fair value as deemed cost and revaluation cost Accumulated foreign currency translation Fair value evaluation of financial assets and liabilities at the acquisition date Derecognition of financial assets and liabilities
K-IFRS Fair value of lands and buildings as of the transition date is to be regarded as net book value. Accumulated foreign currency translation adjustments as of the transition date are reset to zero.
K-GAAP Not applicable
Not applicable
Prospective approach is applied to the accounts which are newly categorized into financial assets and liabilities carried at fair value, as of the transition date. K-IFRS 1309 Financial instruments: Recognition and derecognition is applied prospectively as of the transition date. Designation of AFS financial assets or financial assets/liabilities at FVTPL is principally allowed at the acquisition date, with an exception of one time designation for existing financial assets/liabilities at the transition date. Retroactive application of stock-based compensation as per K-IFRS 1102 Stock-based payment is not allowed. Changes in a decommissioning and restoration liability at the transition date are added to or deducted from the cost of premises and equipment, by discounting the liability using the discount rate at the date of acquisition. Lease contracts existing as of the transition date are subject to K-IFRS 1017 Lease, which is not applied retrospectively. When preparing separate financial statements in accordance with K-IFRS 1027 Consolidated and separate financial statements , net book value of the investments in subsidiaries, jointly controlled entities and associates is regarded as the cost of the equity securities when the cost method is applied.
Not applicable
Not applicable
First time adoption of K-IFRS
Designation of AFS securities or financial assets/ liabilities at FVTPL
Not applicable
Stock-based compensation Decommissioning and restoration liabilities included in the cost of premises and equipment
Not applicable
Not applicable
Lease
Not applicable
Investment in subsidiaries, jointly controlled corporation and relatedparty entities
Not applicable
FINANCIAL REVIEW
Classification
K-IFRS Exceeding 50% of the voting power, having decision making capability and holding benefits and risks constitute control in determining the consolidation scope.
K-GAAP Owning 30% of shares and being the largest shareholder constitute control in determining the consolidation scope, except for special purpose entities (SPEs) that meet certain criteria. The disposal of financial assets is contingent on the risks and rewards of ownership of the financial assets, and whether it has retained control of the financial assets. However, certain transactions such as asset securitization per the Act on Asset-Backed Securitization are considered sales transactions. Assets are divided into cash and due from banks, investment securities, trade receivables, derivative assets and securities consist of trading, AFS and HTM securities. Liabilities are classified into deposits, borrowings, debenture and others.
Change of consolidation Scope
Derecognition of financial assets
Criteria such as risks, awards, control and continuing involvement are to be sequentially considered in determining derecognition timing and recognition scope.
Classification of financial instruments
Financial assets are classified into financial assets at FVTPL, AFS financial assets, HTM securities and loan and receivables and financial liabilities consist of financial liabilities at FVTPL and other liabilities
Measurement of financial instruments
Financial assets/liabilities at FVTPL and AFS financial assets are required to be recorded at fair value with credit risks reflected. HTM financial assets and loan and receivables are to be measured at amortized cost with the effective interest rate method applied.
Certain financial instruments such as trading securities, AFS securities and derivatives, are recorded at fair value, and the reflection of credit risk is not explicitly mentioned. Provision for credit loss to cover estimated losses on loans, based on rational and unbiased criteria, is recorded. (It is higher of the amount applying the percentage of loan loss provision established by the Financial Supervisory Commission or the amount based on loan loss experience ratio.) Property (land or building) to earn rentals is treated as a premises and equipment. In accordance with asset classifications, the asset cost method and asset revaluation reserves are selected as alternative. In addition, cost method is a selective option. Classified into long-term deposit in other non-current assets.
Provision for credit loss
Provision for credit loss should be recorded when objective evidence of impairment exists as a result of one or more events that occurred after initial recognition.
Classification of investment property
Property (land or building) to earn rentals is treated as an investment property.
Measurement of premises and equipment and investment property
It allows an entity to choose whether it adopts a revaluation method or a cost method by asset classifications and a cost method is adopted.
Membership
Classified into intangible asset with indefinite useful lives.
WOORI BANK

Classification
K-IFRS Residual value, useful lives and depreciation method of property, plant and equipment are to be consistently reviewed at least every fiscal year end and significant changes, if any, should be treated as changes in accounting estimates.
K-GAAP
Changes in depreciation methods.
Once depreciation method is determined, it should be consistently applied to all of newly acquired and existing assets.
Measurement of retirement benefits
Both the defined benefit and defined contribution plans are provided and the amounts of defined benefit obligation are computed based on actuarial assumptions.
Provisions for retirement benefits accrued equal to the amounts to be paid at the end of period, assuming that the all entitled employees with a service year more than a year would retire at once. Retirement benefit expenses incur at the point when the payment obligation is fixed.
Financial guarantee
Accounted for as a financial guarantee asset or liability if it is a contract that brings an obligation to an issuer to compensate a loss incurred to a holder, in accordance with the contract provisions, when debtor defaults at a payment date. Recognize financial guarantee assets or liabilities at fair value and subsequently amortize using the effective interest method. Also, financial guarantee liabilities are recorded at higher of provision for guarantee loss or amortized cost. Issuer classifies its financial instruments or components of financial instruments as either financial liabilities or equity instruments at the initial recognition, considering the substance of the contractual arrangement and definition of financial assets and equity instruments.
Not applicable
Liability/equity classification
Classification according to relevant legal framework such as business law
Classification of capital
Classification in capital is pursuant to the substance of the contractual arrangement over its legal form. Closing exchange rates at year end for translation of assets or liabilities denominated in foreign currencies, and closing exchange rates at acquisition date for stockholders equity should be applied. For other comprehensive income items, average exchange rates for the periods concerned should be used.
Capital includes the legal amount paid by shareholders (paid-in capital).
Foreign currency translation
When applying the accounting standards for the banking industry, closing rates are used in translating the statement of financial position and the statement of income.
FINANCIAL REVIEW
(2) Changes in consolidation scope

Changes in consolidation scope due to adoption of K-IFRS are as follows: Subsidiaries under K-GAAP as of December 31, 2011 Woori Credit Information Co., Ltd. Woori America Bank PT. Bank Woori Indonesia Woori Global Market Asia Limited Woori Bank (China) Limited Zao Woori Bank (Russia) Subsidiaries under K-IFRS as of December 31, 2011 Woori Credit Information Co., Ltd. Woori America Bank PT. Bank Woori Indonesia Woori Global Market Asia Limited Woori Bank (China) Limited Zao Woori Bank (Russia) Woori Fund Service Co., Ltd. Korea BTL Infrastructure Fund
Scope difference New subsidiaries Subject to consolidation as substantially controlled by the Group under K-IFRS, however, it was excluded from consolidation per the Act Concerning External Auditor of Corporation under K-GAAP. Not subject to consolidation as no substantive control over principal recoverable trust is held by the Group under K-IFRS, but subject to consolidation per the Administrative Instructions of Banking Supervision under K-GAAP.
Woori Bank Preservation Trust of principal and interest
Woori Bank Preservation Trust of principal and interest
Woori Bank Preservation Trust of principal
Kumho Trust 1st Co., Ltd. Woori IB Global Bond Co., Ltd. Consus 8th LLC. Asiana Saigon Co., Ltd. An-Dong Raja 1st Co., Ltd. KAMCO Value Recreation 1st Securitization Specialty Co., Ltd. IB Global 1st Real DW 2nd Co., Ltd. Hermes STX Co., Ltd. BWL 1st Co., Ltd. Uri Pungsan Inc. Pyeongtaek Ocean Sand Inc.
Subject to consolidation as substantially controlled by the Group under K-IFRS, however, it was excluded from consolidation under K-GAAP due to SPEs limited scope of operations.
WOORI BANK

Subsidiaries under K-GAAP as of December 31, 2011
Subsidiaries under K-IFRS as of December 31, 2011 Haeoreum Short-term Bond 15th (Unsold) G5 Pro Short-term 13th (Unsold) G6 First Class Mid-term E-20 (Unsold) G15 First Class Mid-term C-1 D First Class Mid-term C-151 Woori Partner Plus Private Equity Securities 4th Golden Bridge Sidus FNH video Golden Bridge NHN Online Private Equity Investment Woori CS Ocean Bridge 7th Woori Milestone Private Real Estate Fund 1st Woori Milestone China Real Estate Fund 1st Consus Sakhalin Real Estate Investment Trust 1st Woori Partner Plus Private Trust 7th Uri WB Private Investment Trust 3rd (Bond) KDB Private Equity Securities Investment Trust WB 2nd (Bond) Samsung Plus Private Investment Trust 13th Hanwha Smart Private Trust 43rd (Bond) Eugene Pride Private Trust 21st (Bond) Merits Prime Private Trust 42nd (Bond) Woori Partner Plus Private Equity Securities 8th Woori Partner Plus Private Equity Securities 9th Woori Frontier Alpha Private Equity 8th Midas Private Investment Trust W-3rd Consus Private Securities Investment Trust 54th Allianz Blue Ocean Private Trust 5th Kyobo Axa Long Short Private Trust 2nd Hanhwa Quant Long Short Private Equity3rd Hyundai Advantage Private Trust 14th Mirae Asset Maps Blue Chips Private Trust 2nd Hanwha Smart Private Trust 50th
Difference
Subject to consolidation as substantially controlled by the Group under K-IFRS, however, it was excluded from consolidation under K-GAAP due to SPEs limited scope of operations.
(3) The effects on the Groups financial position and results of operation
The effects on the Groups financial position and results of operation being listed below are set out based on the consolidated financial statements, which may change with subsequent adoption of amendments to the standards and further analysis. Conversion effects to K-IFRS consist of those from changes in the scope of consolidation, reclassifications and net asset changes due to GAAP differences.
1) Summary of the effects on the statement of financial position at January 1, 2010 (Date of transition, Unit: Korean Won in millions):
K-GAAP Cash and due from banks Financial assets at FVTPL AFS financial assets HTM financial assets Loans and receivables Consolidation and equity method investment assets \ 16,423,075 14,041,377 9,758,128 12,524,770 171,198,896 526,938 Transition effects \ (11,382,929) (1,706,532) 6,944,326 2,259 5,650,438 (278,106) K-IFRS \ 5,040,146 12,334,845 16,702,454 12,527,029 176,849,334 248,832 Ref. A B C D E F
FINANCIAL REVIEW
K-GAAP Investment properties Premises and equipment Intangible assets Other assets Current tax assets Deferred tax assets Derivatives assets Assets held for sale Total assets Financial liabilities at FVTPL Deposits Borrowings Debentures Other provision Current tax liabilities Other financial liabilities Other liabilities Deferred tax liabilities Derivatives liabilities Total liabilities Capital stock Hybrid securities Capital surplus Other capital Retained earnings Non-controlling interests Total equity 1,912,338 58,876 189,032 12,364 142,807 \ 226,788,601 \ 4,090,238 151,830,533 20,044,523 27,422,952 708,604 6,928 8,437,189 612,668 \ 213,153,635 \ 3,829,783 812,283 1,135,843 7,850,817 6,240 \ 13,634,966
Transition effects 391,963 446,552 9,267 62,510 4,013 (120,138) 107,508 7,609 \ 138,740 \ 1,674,308 (1,705,983) 707,812 (3,946,849) (157,843) (1,213) (8,108) 80,514 146,104 64,597 \ (3,146,661) \2,181,806 (290) 56,420 1,047,453 12 \ 3,285,401
K-IFRS 391,963 2,358,890 68,143 251,542 16,377 22,669 107,508 7,609 \ 226,927,341 \ 5,764,546 150,124,550 20,752,335 23,476,103 550,761 5,715 8,429,081 693,182 146,104 64,597 \ 210,006,974 \ 3,829,783 2,181,806 811,993 1,192,263 8,898,270 6,252 \ 16,920,367
Ref. G H I J
K L M
N O P Q R
S T U V
W X Y X Z
2) Summary of the effects on the financial position at December 31, 2010 and the results of operation for the year ended December 31, 2010 (Unit: Korean Won in millions):
< Financial position > K-GAAP Cash and due from banks Financial assets at FVTPL AFS financial assets \ 16,096,951 12,886,643 12,710,459 Transition effects \ (12,211,267) (1,782,593) 3,899,631 K-IFRS \ 3,885,684 11,104,050 16,610,090 Ref. A B C
WOORI BANK

K-GAAP HTM financial assets Loans and receivables Consolidation and equity method investment assets Investment properties Premises and equipment Intangible assets Other assets Current tax assets Deferred tax assets Derivatives assets Assets held for sale Total assets Financial liabilities at FVTPL
Transition effects 1,532 9,738,387 (233,408) 366,874 471,274 12,366 66,570 2,833 (122,196) 133,224 5,185 \ 348,412 \ 1,494,136 (1,655,309) 898,584 (3,796,997) (244,161) (1,234) 141,602 74,076 107,425 34,419 \ (2,947,459) \2,181,806 (916) 71,388 1,043,620 (27) \ 3,295,871
K-IFRS 15,920,317 177,630,875 306,229 366,874 2,334,386 39,366 207,467 2,833 8,283 133,224 5,185 \ 228,554,863 \ 4,729,575 157,314,309 18,982,971 20,192,427 519,829 109,283 8,799,937 277,757 107,425 34,419 \ 211,067,932 \ 3,829,783 2,181,806 811,421 938,260 9,718,577 7,084 \ 17,486,931
Ref. D E F G H I J
15,918,785 167,892,488 539,637 1,863,112 27,000 140,897 130,479 \ 228,206,451 \ 3,235,439 158,969,618 18,084,387 23,989,424 763,990 110,517 8,658,335 203,681 \ 214,015,391 \ 3,829,783 812,337 866,872 8,674,957 7,111 \ 14,191,060
K L M
N O P Q R
Deposits Borrowings Debentures Other provision Current tax liabilities Other financial liabilities Other liabilities Deferred tax liabilities Derivatives liabilities Total liabilities Capital stock Hybrid securities Capital surplus Other capital Retained earnings Non-controlling interests Total equity
S T U V
W X Y X Z
<Results of operation >
FINANCIAL REVIEW
K-GAAP Interest income Interest expense Net interest income Net fees and commissions income Dividend on securities Gain (loss) on financial assets at FVTPL Gain (loss) on AFS financial assets Impairment losses for loans, other receivables, guarantees and unused commitments Other operating income (expense) Operating income Gain on investment in associates Income on continuing operation before income tax expense Income tax expense on continuing operation Income on continuing operation Other comprehensive income (loss) Comprehensive income \ 11,105,685 (6,024,477) 5,081,208 508,937 50,187 (30,006) 777,562 (2,393,062) (2,615,887) 1,378,939 37,850 1,416,789 308,150 1,108,639 (268,971) \ 839,668
Transition effects \ (124,637) 70,191 (54,446) (15,144) 68,908 45,219 200,984 (103,021) (23,810) 118,690 1,374 120,064 (33,401) 153,465 15,097 \ 168,562
K-IFRS \ 10,981,048 (5,954,286) 5,026,762 493,793 119,095 15,213 978,546 (2,496,083) (2,639,697) 1,497,629 39,224 1,536,853 274,749 1,262,104 (253,874) \ 1,008,230
Ref. A B
C D E F G
3) Details of financial position reconciliation and results of operations reconciliation Transition effects on financial position A. Cash and due from banks
Certain money market funds (MMF), certificate of deposits (CD) and bank deposits included in cash and cash equivalents under K-GAAP are reclassified into financial asset at FVTPL, AFS financial assets or loans and receivables under K-IFRS.
B. Financial assets at FVTPL

Cash and cash equivalents or AFS securities under K-GAAP are designated as or transferred to financial assets at FVTPL under K-IFRS. Fair value changes due to credit risk adjustment and others result in a change in net assets.
C. AFS financial assets

Certain MMF and CD included in cash and cash equivalents under K-GAAP are transferred to AFS financial assets under K-IFRS. Also, some of
WOORI BANK

AFS securities under K-GAAP are designated as or reclassified to financial assets at FVTPL. In addition, different accounting methods on reversal of impairment loss for AFS securities result in a decrease in net assets.
D. HTM financial assets

Application of the effective interest method to HTM securities measured at amortized cost results in a decrease in net assets.
E. Loans and receivables

Bank deposits included in cash and cash equivalents under K-GAAP are transferred to loans and receivables under K-IFRS and prepaid rental deposits under K-GAAP are reclassified into other assets under K-IFRS. Also, changes in net assets are attributable to the different accounting treatments in deferred loan fees and amortization method using the effective interest rate, combined with different set-out scope of provision for receivables and its calculation methodology.
F. Investment in associates
Some securities accounted for under the equity method under K-GAAP are reclassified as AFS securities under K-IFRS. Accordingly, adjustments regarding equity in earnings have changed the net asset amount.
G. Investment properties
Non-operating fixed assets included in property, plant and equipment under K-GAAP segregated and transferred to investment properties.
H. Premises and equipment

Non-operating fixed assets and assets to be disposed that have been recorded in other assets under K-GAAP are reclassified into investment properties and assets held for sale, respectively, under K-IFRS. Also, acquisition cost adjustment due to revaluation of fixed assets and establishment of provision for asset retirement result in change in net asset value.
I. Intangible assets
Among the deposits recognized under K-GAAP, membership deposit with the expected future economic benefits is reclassified as intangible asset under K-IFRS.
J. Other assets
Prepaid rental expense in rental deposits under K-GAAP is transferred to other assets.
K. Deferred tax assets

Changes in deferral amount arising from fair value evaluation of financial asset/liability and different methodology of impairment assessment, along with different depreciation expense and denial of provision liability have changed the amount of deferred tax asset under K-IFRS.
L. Derivatives assets
FINANCIAL REVIEW
Certain derivative instruments applicable to hedge accounting under K-GAAP are reclassified as a separate derivative asset (hedge) under K-IFRS and the amount of net asset was changed by the net effects of fair value adjustments.
M. Assets held for sale

Properties to be disposed under K-GAAP are reclassified into assets held for sale under K-IFRS.
N. Financial liabilities at FVTPL

Some portion of corporate bonds are designated as and reclassified to financial liabilities at FVTPL. Fair value changes due to credit risk adjustment and others result in a change in net assets.
O. Deposits
Changes in net assets are attributable to the application of the effective interest method in the calculation of interest expense for CD and equity-linked securities (ELS), previously recognized as interest payable under K-GAAP, and net book value adjustments.
P. Borrowings
Changes in net assets are attributable to the application of the effective interest rate method in the calculation of interest expense for borrowings and net book value adjustments.
Q. Debentures
Some debentures are designated as financial liabilities at FVTPL. Hybrid securities meeting the definition of capital, in substance, are reclassified as noncontrolling equity under K-IFRS. Changes in net assets are attributable to the difference in fair value measurement of the corporate bonds subject to the hedge accounting and difference in amortization cost based on the effective interest rate method.
R. Other provision
Difference in calculation methodology of provision for unused commitment, guarantee and other liabilities results in changes in net assets.
S. Other financial liabilities

A substantial portion of unearned rental income recorded in rental deposits within other financial liabilities under K-GAAP are transferred to other liabilities under K-IFRS. Changes in net assets are attributable to the changes in the carrying amount of accrued liabilities in relation to interest payables on CD and ELS and the different calculation methodology for accrued vacation benefits.
T. Other liabilities
A substantial portion of unearned rental income recorded in rental deposits within other financial liabilities under K-GAAP are transferred to other liabilities under K-IFRS. Changes in net assets are attributable to the separation of unearned revenue related to certain portions of provision for credit card point rewards and the amount of unearned revenue reclassified to deferred loan fees.
U. Deferred tax liabilities
WOORI BANK

Changes in deferral amounts of asset and liability, derived by fair value measurement and impairment assessment, changes in depreciation expenses and denial of provision liabilities result in an increase in deferred tax liabilities.
V. Derivatives liabilities
Certain derivative instruments applicable to hedge accounting under K-GAAP are reclassified as a separate derivative liability (hedge) under K-IFRS and the amount of net asset was changed by the net effects of fair value adjustments.
W. Capital stock
Changes in capital were incurred due to fluctuation of exchange rate, applicable when translating capital of overseas subsidiaries.
X. Hybrid securities and other capital

The Group reclassified hybrid securities that meet the definition of capital in economic substance as a capital from liabilities. Gains of losses on fair value measurement in relation to reclassification of AFS securities are transferred to retained earnings. In addition, net asset balance has been adjusted due to the deferred income tax adjustment and others.
Y. Capital surplus
Certain amounts of capital surplus related to the equity method securities under K-GAAP are transferred to retained earnings using the deemed cost method.
Z. Retained earnings
Reclassification of AFS securities and adoption of deemed cost to securities using the equity method changed the amount of retained earnings. In addition, difference in fair value evaluation provisions, accrued interest expense and depreciation expense, along with revaluation of fixed assets and profit/loss adjustment in association with financial guarantee contracts caused a change in retained earnings.
Transition effects on operational results A. Interest income

The amount of interest income changes due to the difference in amortized deferred fee of loans and receivables using the effective rate method, interest income recognized for impaired loans, and adjustments to accrued interest income for impaired loans. In addition, the change of time value in account receivables associated with financial guarantee, transfer of interest income related to credit card points to unearned revenue, recognition of present value discounts amounting to the substantial portion of prepaid rental expenses and its amortization cost using the effective rate method result in changes in interest income.
B. Interest expense
Reclassification of hybrid securities from corporate bonds under K-GAAP to capital account under K-IFRS results in a transfer of interest expense to dividend expense and a change in retained earnings. In addition, difference in amortized interest expenses with regards to financial liabilities and exchange rate applied when translating interest expense of foreign currency denominated financial liabilities results in a change in interest expense.
FINANCIAL REVIEW
C. Net fees and commissions income

Fees and commissions income changes due to the adjusted deferred loan costs (fees) related to loans and receivables and the offset amount with financial guarantee assets when fees and commissions related to financial guarantee contracts are received. Fees and commission expense changes due to the adjusted deferred loan costs (fees) related to loans and receivables.
D. Dividend income
Certain equity method securities are reclassified into AFS securities and dividend income from these reclassified AFS securities has been recognized accordingly.
E. Gain (loss) on financial assets at FVTPL

Different valuation amounts using fair value measurement derived by credit risk adjustments to derivative instruments result in changes in profit/loss on financial assets
F. Gain (loss) on AFS financial assets

Profit or loss on AFS securities has been changed, responding to the account reclassification.
G. Impairment losses for loans, other receivables, guarantees and unused commitments on credit loss
Impairment losses for loans, other receivables, guarantees and unused commitments are caused by differences in the scope and calculation methodology of provision for loans and receivables, and differences in the calculation of unused commitment and payment guarantee.
H. Other operating income (expense)

Changes in other operating income or expense are attributable to gains or losses on foreign currency transactions due to the different exchange rates applied at the transaction date, changes in depreciation expenses due to the changed net book value of fixed assets and changes in selling and administrative expenses contributed by changed vacation benefits and defined benefit retirement expense. Moreover, differences in rental income and expense have occurred in regards with prepaid rental expense and unearned rental income, respectively.
I. Gain (loss) on equity method investments

The net effect of gain or loss on valuation of equity method under K-GAAP has been reversed as certain securities accounted for under the equity method are reclassified to AFS securities under K-IFRS.
J. Income tax expense

Changes in income tax expense are attributable to the changes in deferred tax assets and liabilities.
K. Other comprehensive income (loss)

Reclassified AFS securities under K-IFRS made a change in the amount of other comprehensive income.
wOORi bANk
Organization Chart
13 Units 7 divisions 60 departments
gENERAL SHAREHOLdERS MEETINg BOARd OF dIRECTORS
(2 Offices, 52 Teams, 6 Centers)
PRESIdENT & CHIEF ExECuTIvE OFFICER

MANAgEMENT COMMITTEE
LOAN COMMITTEE
dEPuTY PRESIdENT
cONSUMER bANkiNG bUSiNESS UNiT
cORPORATE bANkiNG bUSiNESS UNiT
SMALL & MEdiUM cORPORATE bANkiNG bUSiNESS UNiT
iNSTiTUTiONAL bANkiNG bUSiNESS UNiT
iNVESTMENT bANkiNG bUSiNESS UNiT
GLObAL bUSiNESS UNiT
cARd bUSiNESS UNiT
fiNANciAL MARkET bUSiNESS UNiT
PRiVATE bANkiNG diViSiON
HOUSiNG fiNANcE diViSiON
consumer banking Strategy dept.
Private banking Strategy dept.
Housing finance dept.
corporate banking Product & Marketing dept.
Small & Medium corporate banking Product & Marketing dept.
institutional Sales Strategy dept.
investment banking dept. financial Advisory & Alternative investment dept.
international banking dept.
card Strategy dept.
Trading & investment Support dept.
Affilication Product dept.
Housing fund dept.
Public fund Sales dept
card cooperation business dept.
Treasury dept.
Sales Support dept.
Project finance dept.
card channel Support dept.
Trading dept.
channel development dept.
card Processing dept.
Securities Trading dept.
customer Service center
Merchant banking dept.
Sales center
corporate banking center
branch
RM / Operation Team
Overseas branch
Merchant banking Operation Team
BOARd gOvERNANCE COMMITTEE
BOARd AudIT COMMITTEE
STANdINg AudIT COMMITTEE MEMBER/dIRECTOR
BOARd RISK MANAgEMENT COMMITTEE BOARd COMPENSATION COMMITTEE
ExECuTIvE RISK MANAgEMENT COMMITTEE
fiNANcE & MANAGEMENT PLANNiNG UNiT.
HUMAN RESOURcES UNiT
RiSk MANAGEMENT UNiT
COMPLIANCE OFFICER cREdiT SUPPORT UNiT OPERATiON & SUPPORT UNiT
iNTERNATiNAL TRAdE bUSiNESS diViSiON
UbiqUiTOUS bANkiNG diViSiON
TRUST bUSiNESS diViSiON
cHANNEL SUPPORT diViSiON
cORPORATE RESTRUcTURiNG diViSiON
international Trade business dept.
Smart banking dept
Trust dept.
Synergy Promotion dept.
Strategy & control Tower dept.
Human Resources dept.
Risk Management dept.
Loan Policy dept.
corporate Restructuring dept.
General Affairs dept.
Public Relations dept.
international Trade Service center
Retirement Ubiquitous banking business Pension business dept. dept.
Products Engineering dept.
finance & Planning dept.
Human Resources development dept. Employee Satisfaction center
Loan Review dept.
Retail credit Analysis & Approval dept.
corporate Restoration dept.
Loan Service center
consumer Protection center
custody Agent dept.
iT Support dept.
Accounting dept.
SME credit Analysis & Approval dept.
corporate Recovery dept.
deposit Service center
Large corporate credit Analysis & Approval dept.
Security control dept.
compliance dept.
credit Management & collection dept.
Audit dept.
Audit & Management inspection dept.
wOORi bANk
Global Network
HEAd OFFICE
203 Hoehyon-dong, 1-ka, Chung-ku, Seoul 100-792, Korea Phone: +82-2-2002-3000 Swift: HVBKKRSE dhaka br. Suvastu Imam Square (1st & 4th Fl.) 65 Gulshan Avenue, Dhaka - 1212, Bangladesh Phone: +880-2-881-3270~3 Fax: +880-2-881-3274/3241 Gaeseong br. Rm.101, Gaeseong Industrial District Management Committee Building 1st Floor, Bongdong-Ri, Gaeseong, Hwanghae-Do, North Korea Phone: +001-8585-2300~2 Fax: +001-8585-2303 Hochiminh city br. 2 Floor, Kumho Asiana Plaza Saigon 39 Le Duan St., Dist 1, HCMC, Vietnam Phone: +84-8-3821-9839 Fax: +84-8-3821-9838 chennai br. 6th Floor, EA Chambers, No. 49, 50L, Whites Road, Royapettah, Chennai 600 014, India Phone: +91-44-3346-6900 Fax: +91-44-3346-6995 Sydney br. temporary office Suite 25.03, Level 25, 363 George Street Sydney NSW 2000 Australia Phone: +61-2-8222-2200 Fax: +61-2-8222-2299
woori America bank, Ridgefield br. 321 Broad Avenue #104 Ridgefield, NJ 07657, USA Phone: +1-201-941-9999 Fax: +1-201-941-4419 woori America bank, Main Street br. 183 Main Street Fort Lee, NJ 07024, USA Phone: +1-201-947-6666 Fax: +1-201-947-3226 woori America bank, Palisades Park br. 225 Broad Avenue Palisades Park, NJ 07650, USA Phone: +1-201-346-0055 Fax: +1-201-346-0075 woori America bank, closter br. 234 Closter Dock Road Closter, NJ 07624, USA Phone: +1-201-784-7012 Fax: +1-201-784-7013 woori America bank, cheltenham br. 7400 Front Street Cheltenham, PA 19012, USA Phone: +1-215-782-2015 Fax: +1-215-782-8907 woori America bank, Elkins Park br. 7300 Old York Rd Elkins Park, PA 19027, USA Phone: +1-215-782-1100 Fax: +1-215-782-1500 woori America bank, Annandale br. Seoul Plaza 4231 Markeham St,. Suite F Annandale, VA 22003, USA Phone: +1-703-256-7633 Fax: +1-703-256-7511 woori America bank, bayside br. 215-10 Northern Blvd. Bayside, NY 11361, USA Phone: +1-718-224-3800 Fax: +1-718-224-3828 woori America bank, wheaton br. 11925 Georgia Ave. Wheaton, MD 20902(Wheaton Park Shopping Center), USA Phone: +1-301-933-1175 Fax: +1-301-933-1560 woori America bank, wilshire br. 3540 Wilshire Blvd. Unit 104, Los Angeles, CA 90010, USA Phone: +1-213-382-8700 Fax: +1-213-382-8787 woori America bank, Olympic br. 2610 W. Olympic Blvd., Los Angeles, CA 90006, USA Phone: +1-213-738-1100 Fax: +1-213-738-1101 woori America bank, fullerton br. 5731 Beach Blvd., Buena Park, CA 90621, USA Phone: +1-714-521-3100 Fax: +1-714-521-3101
OvERSEAS BRANCH
New york Agency 245, Park Ave. 43rd Floor, New York, NY 10167, USA Phone: +1-212-949-1900 Fax: +1-212-490-7146 Swift: HVBKUS33 LA br. 3360, West Olympic Blvd. Suite 300, Los Angeles, CA 90019, USA Phone: +1-213-620-0747~8 Fax: +1-213-627-5438 Swift: HVBKUS6L London br. 9th Floor, 71 Fenchurch Street, London, EC3M 4HD, UK Phone: +44-207-680-0680 Fax: +44-207-481-8044 Tokyo br. Mitsui OSK Building 1st Fl., 2-1-1 Toranomon, Minato-ku, Tokyo 105-0001, Japan Phone: +81-3-3589-2351 Fax: +81-3-3589-2359 Hong kong br. Suite 1401, Two Pacific Place, 88 Queensway, Hong Kong Phone: +852-2521-8016 Fax: +852-2526-7458 Singapore br. 10 Marina Boulevard #13-05 MBFC Tower 2, Singapore 018983 Singapore Phone: +65-6223-5854~6 Fax: +65-6422-2000 Shanghai br. 23F, LJZ Plaza,1600 Century Avenue, Pudong New Area, Shanghai, 200122, China Phone: +86-21-5081-9556 Fax: +86-21-5081-9557 bahrain br. P.O. Box 1151, 4th Floor, Entrance 1, Manama Centre Building, Manama, Bahrain Phone: +973-17-223503 Fax: +973-17-224429 Hanoi br. 11th Fl., Office Tower, Daeha Business Center 360 Kim Ma St., Ba Dinh Dist. Hanoi, Vietnam Phone: +84-4-8315281 Fax: +84-4-8315271
SuBSIdIARY u.S.A
woori America bank 1250 Broadway New York, NY 10001, USA Phone: +1-212-244-3000 Fax: +1-212-736-5929 woori America bank, broadway br. 1250 Broadway New York, NY 10001, USA Phone: +1-212-244-1500 Fax: +1-212-736-5929 woori America bank, flushing br. 136-88 39th Avenue Flushing New York, NY 11354, USA Phone: +1-718-886-1988 Fax: +1-718-762-6898 woori America bank, fort Lee br. 2053 Lemoine Avenue Fort Lee, NJ 07024, USA Phone: +1-201-363-9300 Fax: +1-201-302-0452 woori America bank, woodside br. 43-22 50th St. Woodside, NY 11377, USA Phone: +1-718-429-1900 Fax: +1-718-429-2084
woori America bank, Garden Grove br. 10120 Garden Grove Blvd., Garden Grove, CA 92844, USA Phone: +1-714-534-6300 Fax: +1-714-534-6301 woori America bank, centreville br. 13830 A-12 Braddock Road, Centreville, VA 20121, USA Phone: +1-703-988-9555 Fax: +1-703-988-9554
woori bank (china) Ltd., Shanghai wuzhonglu Sub-br. 1C, Liaoshen Building, 1068 Wuzhong Rd. Minhang Distrct, Shanghai, 200336,China Phone: +86-21-6446-7887 Fax: +86-21-6446-1200 woori bank (china) Ltd., Shenzhen futian Sub-br. Room 107,201, Daqing Building, No. 6027, Shen Nan Road, Futian District, Shenzhen, China Phone: +86-755-8826-9000 Fax: +86-755-8826-9038 woori bank (china) Ltd., Shanghai Jinxiujiangnan Sub-br. 1F, 188 South Jinhui Road, Minhang District, Shanghai, 200237, China Phone: +86-21-3432-1116 Fax: +86-21-3432-1112 woori bank (china) Ltd., beijing Shunyi Sub-br. 1F Tower A, AMB Building, 2, Cangshang St, Shunyi District, 101300, China Phone: +86-10-8945-2220 Fax: +86-10-8949-3560 woori bank (china) Ltd., daLian br. YOMA IFC, No.128 Jinma Road, Dalian Development Area, Dalian, 116600, P.R. China Phone: +86-411-8765-8000 Fax: +86-411-8765-8515 woori bank (china) Ltd., Zhangjiagang Sub-br. 11 Renmin East Road, Zhangjiagang, 215600, China Phone: +86-512-5636-6696 Fax: +86-512-5636-6697 woori bank (china) Ltd., chengdu br. Unit 1of 1F, Unit 3-6 of 3F, Zhonghui Plaza(Phase II) No. 1 Renmin South Road, Chengdu, 610044, China Phone: +86-28-6557-2366 Fax: +86-28-6357-2369
cibubur Sub-branch Office Cibubr Time Square Blok B1/1(3 floors) Jatisampurna Bekasi, Indonesia Phone: +62-21-8430-5050 Fax: +62-21-8430-5353 Swift: HVBKIDJA krakatau Posco Sub-branch Office Jl. Afrika No.2 Krakatau Industrial Estate, Chilegon 42443, Indonesia Phone: +62-25-436-9755 Fax: +62-25-436-9759 Swift: HVBKIDJA
CHINA
woori bank (china) Ltd. 26F, Tower A, Tianyuangang Centre, C2, North Road, East Third Ring Road, Chaoyang District, Beijing, 100027, China Phone: +86-10-8412-3000 Fax: +86-10-8440-0698 woori bank (china) Ltd., Head office business 1F, Tower A, Tianyuangang Centre, C2, North Road, East Third Ring Road, Chaoyang District, Beijing, 100027, China Phone: +86-10-8441-7771 Fax: +86-10-8446-4631 woori bank (china) Ltd., beijing br. 1F, West Tower, Twin Towers, B-12 Jianguomenwai Avenue, Chaoyang District, Beijing, 100022, China Phone: +86-10-8453-8880 Fax: +86-10-8453-8881 woori bank (china) Ltd., Shanghai br. Drum Building 1-2F, Pos- Plaza, 1600 Century Avenue, Pudong New Area, Shanghai, 200122, China Phone: +86-21-5081-0707 Fax: +86-21-5081-2484 woori bank (china) Ltd., Shenzhen br. B0105, B0210 Rongchao Landmark, 4028 Jintian Road, Futian District, Shenzhen, China Phone: +86-755-3338-1234 Fax: +86-755-3338-7227 woori bank (china) Ltd., Suzhou br. 101B, Sovereign Building, #8 Suhua Road, Suzhou Industrial Park,Jiangsu, China Phone: +86-512-6295-0777 Fax: +86-512-6295-2141 woori bank (china) Ltd., TianJin br. No. 1 Building, Aocheng Commercial Square, Binshui West Road, Nankai District, Tianjin, 300381, China Phone: +86-22-2338-8008 Fax: +86-22-2392-5905 woori bank (china) Ltd., Shanghai Puxi Sub-br. S115-S119, 1/F Maxdo center NO.8 Xing Yi Rd. Hong Qiao Development Zone Shanghai, 200336, China Phone: +86-21-6235-1717 Fax: +86-21-6235-1036 woori bank (china) Ltd., beijing wangjing Sub-br. 1F, No 10, Furong Street, Chaoyang District, Beijing, 100102, China Phone: +86-10-8471-8866 Fax: +86-10-8471-5245
HONgKONg
woori Global Market Asia Limited Rooms 1905-1908, 19/F, Gloucester Tower, The Landmark,15 Queens Road Central, Hong Kong Phone: +852-3763-0888 Fax: +852-3763-0808
RuSSIA
Zao woori bank 8th floor, Lotte Plaza, 8, Novinsky Boulevard, Moscow, 121099, Russia Phone: +7-495-783-9787 Fax: +7-495-783-9788 Zao woori bank Saint-Petersburg br. 1st Floor, Atlantic City, 126 Savushkina Street, Saint-Petersburg, 197374, Russia Phone: +7-812-327-9787 Fax: +7-812-327-9789
OvERSEAS OFFICE MALAYSIA

woori bank kuala Lumpur Representative Office Suite 3A-2, Level 3A, Menara IMC, 8, Jalan Sultan Ismail, 50250, Kuala Lumpur, Malaysia Phone: +603-2078-0688 Fax: +603-2072-0688
uAE
woori bank dubai Representative Office #619, Level 6, Liberty House. DIFC, P.O.Box 506760, Dubai, U.A.E. Phone: +971-4-325-8365 Fax: +971-4-325-8366
INdONESIA
P.T.bank woori indonesia 16th Fl., Jakarta Stock Exchange Bldg., JL. Jend Sudirman Kav.52-53, Jakarta 12190, Indonesia Phone: +62-21-515-1919 Fax: +62-21-515-1477 Swift: HVBKIDJA Tangerang Sub-branch Office Ruko Pinangsia Blok H No.1 Lippo Karawaci-Tangerang 15139, Indonesia Phone: +62-21-5577-2345 Fax: +62-21-5577-6363 Swift: HVBKIDJA cikarang Sub-branch Office Cikarang Commercial Center Block A1~A2, J1 Cikarang-Cibarusah KM.40 No.2, Cikarang Selatan Bekasi.,Indonesia Phone: +62-21-8983-5270 Fax: +62-21- 8983-5271 Swift: HVBKIDJA
BRAZIL(BRASIL)
woori bank So Paulo Representative Office Rua Quintana, 887/Cj. 121, Brooklin Novo, 04569-011, So Paulo, SP, Brasil Phone: +55-11-2309-4740 Fax: +55-11-2309-4739
Woori Bank makes you confident in life !
203 Hoehyon-dong, 1-ka, Chung-ku, Seoul 100-792, Korea
Tel. +82-2-2002-3000
www.wooribank.com

Woori Bank 2011 Annual Report

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Woori Bank 2011 Annual Report

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our bank, your confidence

2011 annual report

our bank, your confidence

Directed by Kim, Eun Kyung(Christine) IR Manager, tel: 82-2-2002-3186, ekk@wooribank.com

Created by Lucre Beyond Inc. www.lucrebeyond.com

what makes you confident in life ?

04 05 _ 2011 ANNUAL REPORT

Choi, Jung Min 36-year-old housewife Haeundae-gu, Busan

OUR bANk, yOUR cONfidENcE

08 09 _ 2011 ANNUAL REPORT

OUR bANk, yOUR cONfidENcE

Cha, Jung Ha 21-year-old university student Seodaemoon-gu, Seoul

OUR bANk, yOUR cONfidENcE

Lee, Jong Hee 48-year-old CEO Gangnam-gu, Seoul

Kim, Won Sup 52-year-old coffee shop owner Chung-gu, Ulsan

OUR bANk, yOUR cONfidENcE

Park, Jeong Ja 61-year-old former teacher Suwon Gyeonggi Province

16 17 _ 2011 ANNUAL REPORT

your confidence ecnedifnoc ruoy

Message from the CEO

18 19 _ 2011 ANNUAL REPORT

OUR bANk, yOUR cONfidENcE

OUR bANk, yOUR cONfidENcE

Lee, Soon Woo

OUR bANk, yOUR cONfidENcE

24 25 _ 2011 ANNUAL REPORT

The Hanmaeum (One Heart) Walk through Korea

Board of Directors & Management

26 27 _ 2011 ANNUAL REPORT

Kim, Yong Woo

Lee, Soon Woo

Kim, Yang Jin

OUR bANk, yOUR cONfidENcE

Lee, Pal Seung

Lee, Yong Keun

Eun, Soong Pyo

B.A. in Laws, Yonsei University

Kim, Jung Sik

B.A. in Economics, Korea University

Lee, Kwi Nam

B.A. in Public Administration, Korea University

Yoo, Kwan Hee

B.A. in Economics, Yonsei University

B.A. in Economics, Seoul National University

Seoul National University

ExECuTIvE vICE PRESIdENT

Choi, Seung Nam

Kim, Byung Hyo

Kim, Jang Hag

Kim, Jin Seok

Yoo, Jung Keun

Son, Geun Sun

Lee, Kwang Goo

Jung, Hwa Young

Baeg, Goog Jong

Lee, Dong Gun

Kim, Jong Oun

28 29 _ 2011 ANNUAL REPORT

Composition of the Board of direCtors

major aCtivities for 2011

OUR bANk, yOUR cONfidENcE

TABLE OF CORPORATE gOvERNANCE

Accounting / Financial Management