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Kookmin Bank (KBKD)

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Thursday 13 September, 2001

Kookmin Bank

Interim Results

Kookmin Bank
12 September 2001

                              Interim Report
                           www.kookminbank.com
 
                                                          Contents 
                                                  Financial Highlights 2 
                                                  Major Developments   3        
                                    Management's Discussion & Analysis 6        
                                                  Financial Statement 10        
                                                Corporate information 15        
                                                     Overseas Network 16 
 
 
 
                                Major Developments
 
In the first half of 2001, the Korean economy showed no concrete signs of an
early recovery mainly due to shrinking exports and sluggish investment. A few
hopeful signs were that financial institutions, on average, became sounder
and healthier, and the corporate restructuring continued. However, there
still remains some credit risk in the market, as uncertainty surrounding the
financial market lingers on and corporations slack off in their
belt-tightening. In the midst of these difficulties, Kookmin Bank has
achieved outstanding financial results in various aspects. 

Achievements 

Kookmin Bank set a record in Korean financial history in February 2001 by
reaching the 100 trillion Won mark in total assets. This is an achievement no 
other domestic bank has reached. The 100 trillion Won consists of 84 trillion 
Won in bank assets and 16 trillion won in trust assets. Furthermore, in April 
2001, the amount of total loans outstanding exceeded 50 trillion Won, the 
largest in the Korean financial industry. In addition, during the first half of 
this year, the Bank turned in a ROE of 27.98%, the highest in its history and a 
remarkable improvement compared to the 12.05% of 1H 2000. Also, ROA increased to
1.58% from 0-65%. 

Another record-breaking product is Kookmin. Super Time Deposit. Since its
roll-out in February 1, the 'Super Time Deposit' has had a daily average of
102 billion Won and, as of July 14, recorded 13.9 trillon Won. On July 14,
having set an industry record by accumulation 10 trillion Won in just 82 days,
the Super Time Deposit received a certificate from the Guinness Book of Korea
Records. This product is versatile in that it allows customers to choose
preferred maturity schemes and interest rate type (floating or fixed). 
 
Kookinin Bank is a top-ranking financial institution in Korea, and the first
half of 2001 was another period in which the Bank excelled. For the past
three consecutive years, the Bank has been named by Korea Management
Association Consultants as the financial institution with the industry-best
brand value. Also, in April 25, Kookmin Bank was named as the 'No.l National
Website' for 2001. Internationally renowned journals also lauded Kookmin
Bank. The Euromoney and FinanceAsia named Kookmin Bank as the best domestic
bank in Korea. And the Project Finance International, a world-class industry
journal, ranked the Bank first in Korea, third in Asia and 38th in the world in 
the project finance area. 

Meanwhile, the Bank was the only financial institution to receive the top
award at 'the 2001 Korea Marketing Awards' held on 20 June by Korea
Management Association Consultants. This distinction was made in recognition
of the Bank's success with its profit-oriented marketing strategy using new
channels. To better respond to the fast-changing market environment and thus
enhance profitability, the Bank has focused on expanding its Internet banking
service, adopting a Customer Relationship Management (CRM) system.

Initiatives in Internet Banking 

As of April, www.kookminbank.com has served about 1 million customers. In
addition to one of the biggest cyber banking customer bases in Korea, the
Bank excels in offering various Internet banking services. During the first
half of this year, the Bank introduced 'Corporate Internet Loan', 'Kookmin
Paperless Loan', 'Kookmin Internet Savings', and 'Mondex Free Pass', Korea's
first e-cash system. By responding to diverse customer needs with innovative
services such as these, the Bank has been able to secure the initiative in
Internet banking. To maintain its lead in this strategic sector, the Bank
plans to develop products and services exclusive to Internet customers and to
make them available via mobile phones and cordless internet terminals in the
near future. 

Merger with H&CB 

On 23 April 2001, Kookmin Bank signed a merger contract with Housing &
Commercial Bank(H&CB) to become the country's largest commercial bank with a
clear dominance in retail (consumer mortgage) banking. With assets amounting
to more than 170 trillion won, the merged bank, slated to start operations on
1 November 2001, is expected to rank among the world's top 70 commercial
banks. The new bank's vision is 'To lead Korea's retail financial services
as Korea's best financial institution'. 

Technicai Developments 

The Bank launched Kookmin Interbank Payment Service(KIPS) on July 9, 2001.
KIPS allows financial institutions to settle transactions in 28 different
foreign currencies through their foreign currency checking accounts at
Kookmin Bank. By constructing this advanced clearing system, the Bank offers
better service at lower costs and prepared a solid basis for payment services
both in foreign currencies and Free Won. In addition, this service will
enhance the reputation of Kookmin Bank as a forerunner of the domestic F/X
market. 

For the first time in the Korean financial industry, Kookmin Bank's homepage
has established an e-CRM (Customer Relationship Management) system. Through
this system, the Bank can tailor its marketing approach to each
customer's financial status and needs. Thanks to this system, actual
consultation and transactions, which have been possible only off-line, are
now available online. Furthermore, this system will be employed in the areas
of DM dispatch and new product advertising. The CRM system, however, is not
only limited to the Internet. The off-line CRM system maintains the Bank's
high-net-worth customer relationships and adopts scientific marketing methods
to promote new products. The CRM system analyzes customer data and generates a 
wealth of information that forms the basis of the Bank's tailor-made marketing. 
Customer information is stored in a database for future market purposes. 

Kookmin Bank is stepping its effort to develop an Advanced Credit Operations
(ACRO) System, a  credit system advanced enough to satisfy global standards. 
This system enables construction of the optimum portfolio and efficient 
management of credit limit, as it accurately measures credit risk by unit. 
customer, and product. Moreover, it is a state-of-the-art, total credit support 
system that helps create a seamless workflow of the entire credit process 
ranging from marketing to monitoring. The system is slated for 2002. 
 
                         Management's Discussion & Analysis 

Highlights of Income Statement 

Net income stood at W 662 billion at the end of the first half of this year,
a 190% increase from the W 229 billion achieved in the first half of 2000,
mainly owing to a sharp drop in loan loss provisions and a recovery in
trading/valuating gains off the fixed-income book. 

Net interest income was up 8.8% YoY, led mainly by strong average earnings
asset growth. Non-interest income continued to show a robust expansion,
increasing 79.2% YOY. The expansion can be attributed to the combination of
the ongoing rapid growth in the credit card business, sharply improved
margins on the trust business, and better trading results. 

                                                             (Won in billions) 

                                                                              
                                             2001            2000       2000    
                                            Jan-Jun         Jan-Jun    Jan-Dec 
 
  Interest income                            3,341           3,042      6,406 
  Interest expenses                          2,210           2,002      4,253 
  Net interest income                        1,131           1,040      2,153 

  Bad debt expense                             217             277        641 
  Net interest income after bad                914             763      1,512 
  debt expenses                                                               

  Non-interest income                        2,118           1,182      2,446 
  Non-interest expenses                      2,346           1,594      3,065 
  Operating income                             686             351        894 

  Non-operating income, net                    271            (22)        145 
  Net income before income tax                 957             329      1,039 
  expenses                                                                    

  Income tax expense                           295             100        319 
  Net income                                   662             229        720 
 

Highlights of Balance Sheet 

Total assets amounted to W 104,021 billion, an increase of W 13,774 billion
or 15.3% YoY. While banking account increased by W 13,373 billion, trust
account increased by W 401 billion. 

Total deposits rose W 6,449 billion. 9.5% YoY, to W 74,328 billion. Banking
account deposits increased by W 7,792 billion whereas trust account decreased
by W 1,343 billion. 

Loans amounted to W 52.945 billion, an increase of W 9,478 billion or 21.8%
YoY. Loans in banking account came to W 51,890 billion, an increase of 
W10,123 billion or 24.2%. On the other hand, trust loans decreased by 645
billion. 

In comparison to the end of June 2000. securities increased by W 3,689
billion, or 11.1%, to W 36.940 billion. Investment securities of the banking
account rose by W 4,095 billion or 23.9%. 

                                                                              
                                                             (Won in billions)  
                                                        
                                            Jun 2001    Dec 2000    Jun 2000
  
  Total Assets                              104,021      96,242      90,247   
  Banking account                            87,950      81,521      74,577   
  Trust Account                              16,071      14,721      15,670   

  Total deposits                             74,328      70,720      67,879   
  Banking account                            60,610      56,522      52,818   
  Trust account                              13,718      14,198      15,061   

  Total loans                                55,259      51,830      45,494   
  Loans                                      52,945      49,491      43,467   
  Banking account                            51,890      48,300      41,767   
  Trust account                               1,055       1,191       1,700   
  Advance for customers                         231         241         334    
  Privately placed bonds                      2,121       2,098       1,693   
  Banking account                             2,066       2,029       1,606   
  Trust account                                  55          69          87     

  Securities                                 36,940      32,118      33,251   
  Banking account                            23,927      19,351      19,768   
  Trust account                              13,013      12,767      13,483   
  Shareholders equity                         4,973       4,257       3,893     

  - Total assets is the sum of banking and trust accounts, less intra-accounts  
    and discount present value.                                  
 
Earnings 

At the end of the first half of 2001, ROE and ROA stood at 27.98% and 1.58%,
respectively, representing an increase of 15.93%p and 0.93%p from a year ago. 

NIM and NIS dropped to 2.88% and 3.65%, representing a decline of 0.35%p and
0.51%p, respectively, due to a growing competition among domestic banks
pursuing an aggressive loan expansion. 

However, the cost income ratio improved from 37.90% in 1H of 2000 to 33.34%,
mainly due to an increase in gains on securities and fee income. 
 
                                                                       (%)
                                                                   
                                   Jun 2001    Dec 2000    Jun 2000  

             ROE                     27.98       17.96       12.05 
             ROA                      1.58        0.97        0.65 
             Cost Income Ratio       33.34       35.24       37.90 
             Net Interest Margin      2.88        3.12        3.23 
             Net interest Spread      3.65        3.91        4.16 

Loans 

Total loans in Won stood at W49,107 billion as of 30 June 2001, an increase
of W9,542 billion or 24.1% YoY. The increase stemmed mainly from household
loans and SME loans, which recorded 30.7% and 26.0% YoY growth rates,
respectively. 

                                                                              
                                                            (Won in billions)   
                                                       
                       Jun 2001             Dec 2000              Jun 2000   

                         Amt.       %        Amt.      %      Amt.        %     
  Household loans       18,429     37.5    16,128     35.4    14,099     35.6 
  Corporate loans       29,968     61.1    27,445     60.3    25,167     63.6 
    (SMEs)              22,278     45.4    19,525     42.9    17,684     44.7 
  (Large Corp.)          7,690     15.7     7,920     17.4     7,483     18.9 
  Others                   710      1.4     1,964      4.3       299      0.8 
  Total                 49,107    100.0    45,537    100.0    39,565    100.0 

- The amount excludes borrowings in foreign currencies. 
- Others include loans to public institutions and corporations. 

Asset Quality 

The substandard and below ratio improved in the first half of this year,
falling from 6.98% as of 31 Dec 2000 to 5.42%, mainly due to W 484 billion
write-offs and W 157 billion NPL sales. In addition, the substandard and below
coverage ratio was 58.5% in the first half of 2001. 

                                                            (Won in billions, %)

                                                                             
                                            Jun 2001    Dec 2000    Jun 2000  

   Total Credit                               58,315      54,884      48,781 
   Normal                                     51,767      48,101      41,759 
   Precautionary                               3,386       2,950       2,525 
   Substandard                                 2,152       2,455       2,901 
   Doubtful                                      817       1,067       1,161 
   Estimated loss                                193         311         435 

   Loan loss reserve (LLR)                     1,851       2,221       2,188 

   Substandard and below                       3,162       3,833       4,497 
   Substandard and below / Total Credit         5.42        6.98        9.22 
   LLR / Substandard and below                  58.5        57.9        48.7 

Capital Adequacy Ratio 

The Bank's capital adequacy ratio and Tier 1 ratio were 11.57% and 7.86%,
respectively, representing 0.46%p and 0.47%p increases compared to June 2000. 

                                                            (Won in billions. %)

                                            Jun 2001    Dec 2000    Jun 2000 

Tier 1 Capital                                 4,857       3,843      3,667 
Tier 11 Capital                                2,290       2,458      1,848
Adjustment (-)                                     3           3          3 
Total core and supplementary capital           7,144       6,298      5,512
Risk-weighted assets                          61,763      56,347     49,632
On-Balance                                    57,885      52,703     46,487
Off-Balance                                    3,908       3,644      3,145

Capital adequacy ratio                         11.57       11.18      11.11
Tier 1 Capital                                  7.86        6.82       7.39
Tier 11 Capital                                 3.71        4.36       3.72
                                                

                         Non-consolidated Balance Sheet 
                    (Banking Accounts) June 30, 2001 and 2000 

                                                                              
                            In Million Won                In Thousand USD   
                          Jun 2001      Jun 2000      Jun 2001      Jun 2000    
  ASSETS                                                                      
  Cash and due from       4,053,538     6,160,500     3,116,428     4,736,296 
  banks                                                                       
  Trading securities      2,679,171     2,615,190     2,059,791     2,010,602 
  Investment             21,247,980    17,152,701    16,335,804    13,187,285 
  securities                                                                  
  Loans                  54,187,725    43,707,032    41,660,433    33,602,699 
  Fixed assets            1,276,578     1,270,452       981,455       976,745 
  Other assets            4,505,735     3,671,057     3,464,085     2,822,370 

  Total assets           87,950,727    74,576,932    67,617,996    57,335,997 

  LIABILITIES                                                                 

  Deposits               60,610,403    52,818,243    46,598,295    40,607,552 
  Borrowings              9,725,154     6,264,879     7,476,862     4,816,544 
  Debentures              6,124,775     5,730,639     4,708,830     4,405,812 
  Other liabilities       6,517,091     5,870,350     5,010,449     4,513,223 
  Total liabilities      82,977,423    70,684,111    63,794,436    54,343,131 
 

SHAREHOLDERS' EQUITY 

Common stock, par value:W 5,000, 
authorized : 1.000 million shares, 
issued and outstanding / 
301,599,923 shares        1,508,000    1,498,067      1,159,375     1,151,739 

                                                                              
Preferred stock,par value: W 5,000
non-cumulative, non-participating
issued and outstanding/32,000,000
shares                      160,000      200,000        123,011       153,763

Capital surplus           1,608,151    1,600,983      1,236,374     1,230,863 
                                                                     
Retained earnings         1,536,215      552,952      1,181,068       425,119  
                                                                    
Capital adjustment          160,938       40,819        123,732        31,382 
                                                                   
Total Shareholder's 
   equity                 4,973,304    3,892,821      3,823,560     2,992,866 

Total liabilities                                                               
and Shareholders' equity 87,950,727   74,576,932     67,617,996    57,335,997
                                                                      
- Conversion from KRW to USD has been made at the exchange rate of Won 1300.70  
  to USD 1 on June 30, 2001.

                       Non-consolidated income Statement 
         (Banking Accounts) for the periods ended June 30, 2001 and 2000 

                                                                              
                            In Million Won                In Thousand USD 
                         Jun 2001      Jun 2000       Jun 2001       Jun 2000   
     
Interest income                                                             
  Interest on due         88,732        161,356         68,219        124,054 
  from banks                                                                  
  Interest on            791,027        789,927        608,155        607,309   
  securities                                                                  
  Interest on          2,401,121      2,050,845      1,846,022      1,576,724 
  loans                                                                       
  Other interest          60,601         39,413         46,590         30,302 
  income                                                                      

  Total interest       3,341,481      3,041,541      2,568,986      2,338,389 
  income                                                                      

  Interest expenses                                                             
  Interest on          1,679,542      1,389,061      1,291,260      1,067,933 
  deposits                                                                    
  Interest on            236,049        245,643        181,479        188,855 
  borrowings                                                                  
  Interest on            264,811        350,284        203,592        269,304 
  debentures                                                                  
  Other interest          30,247         16,611         23,254         12,770 
  expenses                                                                    

  Total interest       2,210,649      2,001,599      1,699,585      1,538,862 
  expenses                                                                    

  Net interest         1,130,832      1,039,942        869,401        799,527 
  income                                                                      
  Bad debt               217,346        276,659        167,099        212,700 
  expenses                                                                    

  Net interest           913,486        763,283        702,302        586,827 
  income after                                                                
  bad debt                                                                    
  expenses                                                                    

  Non-interest                                                                
  income                                                                      

  Fees and               194,201        147,714        149,305        113,565 
  commission                                                                  
  income                                                                      
  Dividends on               309          1,640            237          1,261 
  trading                                                                     
  securities                                                                  

  Dividends on             3,744         43,653          2,879         33,561 
  investment                                                                  
  securities                                                                  

  Gain on foreign        143,504         80,114        110,328         61,593 
  currency                                                                    
  transactions                                                                

  Gain on              1,538,597        749,496      1,182,900        576,225 
  derivatives                                                                 

  Others                 237,574        159,661        182,651        122,751 

  Total                2,117,929      1,182,278      1,628,300        908,956 
  non-interest                                                                
  income                                                                      
 
 
                       Non-consolidated Income Statement 
           (Banking Accounts) for the periods ended June 30, 2001 and 2000 
    
                             In Million Won                In Thousand USD 
                         Jun 2001       Jun 2000        Jun 2001    Jun 2000    
                                                
 
  Non-interest                                                                
  expenses                                                                    

  Fees and                 37,649        26,845          28,945       20,639 
  commission                                                                  
  expenses                                                                    

  General and             528,659       487,308         406,442      374,651 
  administrative                                                              
  expenses                                                                    

  Loss on foreign          57,610       56,180          44,291       43,192 
  currency                                                                    
  transactions                                                                

  Loss on               1,573,841      742,632       1,209,996      570,948 
  derivatives                                                                 

  Others                  147,827      281,475         113,652      216,402 

  Total non-interest    2,345,586    1,594,440       1,803,326    1,225,832 
  expenses                                                                    

  Operating income        685,829      351,121         527,276      269,951 

  Non-operating           271,267      (21,714)        208,554     (16,694) 
  income, net                                                                 

  Net income before       957,096      329,407         735,830      253,257 
  income tax expense                                                          

  Income tax              294,645      100,687         226,527       77,410 
  expenses                                                                    

  Net income               662,451     228,720         509,303      175,847 

  Earnings per               2,195         764            1.69         0.59 
  common share (In                                                            
  KRW and USD)                                                                
 
Diluted earnings per common  1,926         660            1.48         0.51
share (In KRW and USD) 

                          Non-consolidated Balance Sheet
                      (Trust Accounts) June 30, 2001 and 2000

ASSETS
                              In Million Won            In Thousand USD

                         Jun 2001          Jun 2000     Jun 2001     Jun 2000 

Cash and due                  107                 -           82            -

Securities             13,012,758        13,482,882   10,004,427   10,365,866

Loans                     785,667         1,614,916      604,034    1,241,575

Call loans                270,000            85,000      207,581       65,349

Bonds purchased under resale
agreement                       -                 -            -            -

Collecting money 
  receivables           2,121,144                 -    1,630,771            -

General investment real 
  estate                   40,000                 -       30,753            -

Other assets              463,190           930,973      356,108      715,748

Lendings to banking 
  account                 300,253          304,569       230,839      234,158

Allowance for valuation 
  of receivables        (301,877)        (443,996)     (232,088)    (341,352)

Total assets           16,691,242       15,974,344    12,832,507   12,281,344

LIABILITIES
     
Money trust            13,717,794        15,060,734    10,546,470   11,578,945

Property trust          2,136,981           20,248     1,642,947       15,567

Borrowings                289,787          365,560       222,793      281,049

Other liabilities         532,471          514,870       409,373      395,841

Special reserves           14,209           12,932        10,924        9,942

Total liabilities      16,691,242       15,974,344    12,832,507   12,281,344


                          Non-consolidated Income Statement
              (Trust Accounts) for the periods ended June 30, 2001 and 2000

                               In Million Won               In Thousand USD

                         Jun 2001           Jun 2000   Jun 2001         Jun 2000

Revenue
     
Interest on due from banks      -                  1          -                1

Interest on securities    519,892            702,173    399,702          539,842

Interest on loans and 
  discounts                51,244            103,361     39,397           70,466

Interest on call loans      3,067                991      2,358              762

Interest on bonds under 
  resale agreements             -              1,384          -            1,064

Interest on collecting 
  money receivables       143,911                  -    110,641                -

Other interest income       3,766                  -      2,896                -

Gain on derivatives 
  transactions                500                  -        385                -

Revenues on movables & 
  real estate                 987                  -        759                -

Revenues on securities     86,882            106,300     66,796           81,725

Commissions received        2,200                 71      1,691               54

Interest on loans to 
  banking account          10,298              6,711      7,917            5,160

Transfer from special 
  provision                 3,927                  -      3,019                -

Transfer from allowanced 
  for valuation of 
  receivables               6,500              9,081      4,997            6,982

Other Revenues             11,471            185,016      8,819          142,243

Total Revenues            844,645          1,115,089    649,377          857,299

Expenses
     
Gain on money trust       511,121            665,027    392,958          511,284

Gain on property trust    139,644                414    107,361              318

Interest on borrowings      8,406              1,744      6,463            1,341

Commissions paid            7,883             10,648      6,061            8,186

Loss on derivatives 
  transactions                455                  -        350                -

Expenses on securities     40,849           157,903      31,405          121,398

Contribution to fund        1,771             1,238       1,361              952

Taxes                           -             1,480           -            1,138

Trust fees and 
  commissions             117,691           103,469      90,483           79,549

Other expenses              8,573             6,477       6,591            4,980

Provision for special 
  reserve                   4,731             4,822       3,637            3,707

Provision for possible 
  loan losses               3,521           161,867       2,707          124,446

Total expenses            844,645         1,115,089     649,377          857,299


                          Corporate Information
Head Office

9-1, 2-ga, Namdaemoon-ro, Jung-gu, Seoul 100-703, Korea

Tel:(822) 317-2114 / 317-2124                 Fax (822) 317-2885

SWIFT Code:  CZNBKRSE                         Telex: K23481, K26109

http://www.kookminbank.com

Date of establishment:  Feb 1, 1963

Number of employees:  11,033

Number of Offices:  Domestics:  575
                    Overseas:     7

Paid-in Capital:  W 1,668 billion

Total Shareholders' Equity:  W4,973 billion

Number of Shareholders' Equity
  Authorized:    1,000,000,000
  Common Stock:    301,599,923
  Preferred Stock:  32,000,000

                               Overseas Network

Japan (Kookmin Bank Tokyo Branch)

Yurakucho Denki Bldg. -N, 14F, 1-7-1.  Yurakucho, Chiyoda-ku.Tokyo 100 Japan
Tel: (81-3) 3201-3411                     Fax:  (81-3) 3201-3410
SWIFT:  CZNBJPJT                          Telex: 2224334CNBTKY

USA (Kookmin Bank New York Branch)

565 Fifth Avenue, 24th Floor, New York. NY. 10017 U.S.A.

Tel: (1-212) 697-6100                     Fax: (1-212) 697-1456
SWIFT:  CZNBUS33                          Telex: 49666583

United Kingdom (Kookmin Bank International Ltd.)

6th Floor, Princes Court, 7 Princes Street, London EC2R 8AQ, U.K.

Tel:  (44-207) 710-8300                   Fax: (44-207) 726-2808
SWIFT: CZNBGB2L                           Telex: 8811971 KBILDG


China (Kookmin Finance Asia Ltd. (H.K)
19F, Gloucester Tower, 11 Pedder Street, Central, Hong Kong, China
Tel: (852) 2530-3633/2521-3584    Fax: (852) 2869-6650/2840-0207

SWIFT: CZNBHKHH                   Telex: 68015 KOFAHX

Luxembourg (Kookmin Bank Luxembourg S.A.)

11A, Bolulevard Prince Henri, L-1724 Luxembourg
TEL: (352) 466-555                Fax: (352) 466-566

Swift: CZNBLULL                   Telex: 60130 CNBLU

New Zealand (Kookmin Bank Auckland Branch)

Level 19, ASB Bank Centre Cnr. Albert & Wellesley Streets, PO Box 7506,

Auckland, New Zealand

Tel: (64-9) 366-1000              Fax: (64-9) 366-6608
SWIFT: CZNBNZ2A                   Telex: NZ60214

Argentina (Kookmin Bank Buenos Aires Branch)

AV, Rivadavia 2690 Capital Federal (1034) Buenos Aires Argentina
Tel: (54-11) 4953-3500            Fax: (54-11) 4953-0080

SWIFT: CZNBARBA                   Telex: AR23053



                                                                                
                                                                                
            

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