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Risk Management (Tables)
12 Months Ended
Dec. 31, 2021
Risk Management [Abstract]  
Capital risk management
Details of the Company’s capital management accounts as of December 31, 2020 and 2021 are as follows:
 
 
  
 
 
  
2020
 
 
2021
 
 
  
 
 
  
In millions of won
 
Total borrowings and debt securities
            69,724,581       80,529,513  
Cash and cash equivalents
              2,029,584       2,635,238  
             
 
 
   
 
 
 
Net borrowings and debt securities
              67,694,997       77,894,275  
             
 
 
   
 
 
 
Total equity
              70,666,846       65,311,849  
             
 
 
   
 
 
 
Debt to equity ratio
              95.79     119.27
Credit risk management
Book values of the financial assets represent the maximum exposed amounts of the credit risk. Details of the Company’s level of maximum exposure to credit risk as of December 31, 2020 and 2021 are as follows:
 
 
 
 
 
 
2020
 
 
2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In millions of won
 
Cash and cash equivalents
          2,029,584       2,635,238  
Financial assets at fair value through profit or loss(*1)
            1,808,404       932,736  
Derivative assets (trading)
            110,764       443,027  
Financial assets at fair value through other comprehensive income (debt securities)
            —         491  
Financial assets at amortized cost
            14,422       25,273  
Loans
            790,162       909,071  
Long-term/short-term financial instruments
            2,062,103       1,728,508  
Derivative assets (applying hedge accounting)
            55,649       204,756  
Trade and other receivables
            9,780,039       10,029,276  
Financial guarantee contracts(*2)
            3,224,696       3,718,015  

  (*1)
Equity investments held by the Company are excluded.
 
  (*2)
Maximum exposure associated with the financial guarantee contracts is the maximum amounts of the obligation.
Sensitivity analysis of Defined benefit obligation
A sensitivity analysis of defined benefit obligation assuming a 1% increase and decrease movements in the actuarial valuation assumptions as of December 31, 2020 and 2021 are as follows:
 
 
 
 
 
 
 
 
2020
 
 
2021
 
Type
 
Accounts
 
 
 
 
1% Increase
 
 
1% Decrease
 
 
1% Increase
 
 
1% Decrease
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In millions of won
 
Future salary increases
 
Increase (decrease) in
defined benefit obligation
          488,087       (425,708     466,832       (407,554
Discount rate
  Increase (decrease) in defined benefit obligation             (443,527     524,856       (422,290     499,571  
Changes of employee benefits assuming a 1% increase and decrease movements in discount rate on plan asset for the years ended December 31, 2020 and 2021 are ₩20,960 million and ₩25,649 million, respectively.
Changes in provisions due to movements in underlying assumptions
Changes in provisions due to movements in underlying assumptions as of December 31, 2020 and 2021 are as follows:
 
Type
  
Accounts
  
2020
 
 
2021
 
PCBs
   Inflation rate      1.06     1.37
     Discount rate      1.83     1.88
Nuclear plants
   Inflation rate      1.07     1.41
     Discount rate      2.20     2.20
Spent fuel
   Inflation rate      2.93     2.93
     Discount rate      4.49     4.49
Sensitivity analysis of Provisions due to movements in underlying assumptions
A sensitivity analysis of provisions assuming a 0.1% increase and decrease movements in the underlying assumptions as of December 31, 2020 and 2021 are as follows:
 
 
  
 
  
 
 
 
2020
 
 
2021
 
Type
  
Accounts
  
 
 
 
0.1% Increase
 
 
0.1% Decrease
 
 
0.1% Increase
 
 
0.1% Decrease
 
 
  
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 
 
 
In millions of won
 
Discount rate
   PCBs            (292     293       (222     223  
     Nuclear plants              (326,926     336,928       (369,540     381,026  
     Spent fuel              (51,558     53,571       (51,430     53,438  
Inflation rate
   PCBs              295       (294     224       (224
     Nuclear plants              357,676       (347,450     403,420       (391,754
     Spent fuel              54,345       (52,375     54,210       (52,245
Foreign currency risk
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities as of December 31, 2020 and 2021 are as follows:
 
 
  
Assets
 
  
Liabilities
 
Type
  
2020
 
  
2021
 
  
2020
 
  
2021
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
In thousands of foreign currencies
 
AED
     39,678        6,481        31,594        31,637  
AUD
     133        3,733        707,538        926,960  
BDT
     93,442        50,145        —          577  
BWP
     890        939        —          —    
EGP
     —          —          948        595  
CAD
     247        582        1,840        2,266  
CHF
     —          —          500,406        500,230  
CZK
     —          —          2,033        386  
EUR
     310        1,809        121,069        42,981  
GBP
     —          —          43        —    
HKD
     —          —          1,651,839        1,651,665  
IDR
     342,496        768,731        555,241        995,510  
INR
     1,231,895        1,715,900        155,134        342,833  
JOD
     1,673        1,852        —          118  
JPY
     825,269        697,747        484,585        153,383  
KZT
     1,510        1,510        —          —    
MGA
     5,645,349        4,262,857        —          475,807  
MMK
     11,032        210,335        —          —    
MYR
     —          1,964        —          —    
PHP
     191,122        164,167        104,161        104,245  
PKR
     371,328        200,844        12,222        74,423  
SAR
     2,178        2,615        —          —    
SEK
     —          —          449,824        449,167  
USD
     1,445,522        1,381,441        12,234,563        12,023,085  
UYU
     78,265        90,930        1,585        3,097  
VND
     672,563        952,135        —          262,372  
ZAR
     303        31,971        —          —    
Sensitivity analysis of Foreign currency risk
A sensitivity analysis on the Company’s income for the period assuming a 10% increase and decrease in currency exchange rates as of December 31, 2020 and 2021 are as follows:
 

 
  
 
 
  
2020
 
  
2021
 
Type
  
 
 
  
10% Increase
 
  
10% Decrease
 
  
10% Increase
 
  
10% Decrease
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
 
 
  
In millions of won
 
Increase (decrease) of profit before income tax
            (1,336,821      1,336,821        (1,439,185      1,439,185  
Increase (decrease) of equity(*)
              (1,336,821      1,336,821        (1,439,185      1,439,185  
 
  (*)
The effect on the shareholders’ equity excluding the impact of income taxes.
Interest rate risk
The Company’s borrowings and debt securities with floating interest rates as of December 31, 2020 and 2021 are as follows:
 
Type
  
 
 
  
2020
 
  
2021
 
 
  
 
 
  
 
 
  
 
 
 
  
 
 
  
In millions of won
 
Short-term borrowings
            171,518        391,897  
Long-term borrowings
              2,191,322        2,405,244  
Debt securities
              250,968        257,667  
             
 
 
    
 
 
 
              2,613,808        3,054,808  
             
 
 
    
 
 
 
Sensitivity analysis of Interest rate risk
A sensitivity analysis on the Company’s long-term borrowings and debt securities assuming a 1% increase and decrease in interest rates, without consideration of hedge effect of related derivatives for the years ended December 31, 2020 and 2021 are as follows:
 
 
  
 
 
 
2020
 
 
2021
 
Type
  
 
 
 
1% Increase
 
 
1% Decrease
 
 
1% Increase
 
 
1% Decrease
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
In millions of won
 
Increase (decrease) of profit before income tax
           (26,138     26,138       (30,548     30,548  
Increase (decrease) of shareholder’s equity(*)
             (26,138     26,138       (30,548     30,548  
 
  (*)
The effect on the shareholders’ equity excluding the impact of income taxes.
Electricity rates risk
A sensitivity analysis on the Company’s income for the period assuming a 1% increase and decrease in price of electricity for the years ended December 31, 2020 and 2021 is as follows:
 
 
 
 
 
 
2020
 
 
2021
 
Type
 
 
 
 
1% Increase
 
 
1% Decrease
 
 
1% Increase
 
 
1% Decrease
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In millions of won
 
Increase (decrease) of profit before income tax
          557,310       (557,310     572,102       (572,102
Increase (decrease) of shareholder’s equity(*)
            557,310       (557,310     572,102       (572,102
 
  (*)
The effect on the equity excluding the impact of income taxes.
Details of maturities of non-derivative financial liabilities
The expected maturities for non-derivative financial liabilities as of December 31, 2020 and 2021 in detail are as follows:
 
 
 
 
 
 
2020
 
Type
 
 
 
 
Less than

1 year
 
 
1~2 Years
 
 
2~5 Years
 
 
More than

5 years
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In millions of won
 
Borrowings and debt securities
          12,413,346       10,919,041       24,778,020       34,215,888       82,326,295  
Finance lease liabilities
            614,442       569,161       1,564,377       2,461,557       5,209,537  
Trade and other payables
            5,679,856       373,907       894,903       1,167,171       8,115,837  
Financial guarantee contracts(*)
            926,244       348,860       26,230       1,923,362       3,224,696  
           
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
            19,633,888       12,210,969       27,263,530       39,767,978         98,876,365  
           
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 

 
 
 
 
 
2021
 
Type
 
 
 
 
Less than

1 year
 
 
1~2 Years
 
 
2~5 Years
 
 
More than

5 years
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In millions of won
 
Borrowings and debt securities
          15,833,589       11,229,657       28,663,693       36,223,543       91,950,482  
Lease liabilities
            620,121       636,724       1,521,421       2,150,722       4,928,988  
Trade and other payables
            7,569,869       777,017       725,231       667,304       9,739,421  
Financial guarantee contracts(*)
            435,729       —         3,105,599       176,687       3,718,015  
           
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
            24,459,308       12,643,398       34,015,944       39,218,256       110,336,906  
           
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
  (*)
This represents the total guarantee amounts associated with the financial guarantee contracts. Financial guarantee liabilities which are recognized as of December 31, 2020 and 2021 are ₩66,354 million and ₩80,841 million, respectively.
 
The expected maturities for non-derivative financial assets
The expected maturities for non-derivative financial assets as of December 31, 2020 and 2021 in detail are as follows:
 

 
  
 
 
 
2020
 
Type
  
 
 
 
Less than

1 year
 
 
1~5 Years
 
 
More than

5 years
 
 
Other (*)
 
 
Total
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
In millions of won
 
Cash and cash equivalents
           2,029,584       —         —         —         2,029,584  
Financial assets at fair value through other comprehensive income
             —         —         —         358,559       358,559  
Financial assets at amortized cost
             13,149       1,265       8       —         14,422  
Loans
             78,805       385,571       325,212       31,506       821,094  
Long-term/short-term financial instruments
             1,483,482       252,349       386       325,886       2,062,103  
Financial assets at fair value through profit or loss
             1,196,101       —         2,690       682,591       1,881,382  
Trade and other receivables
             7,920,005       1,160,400       704,494       —         9,784,899  
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
             12,721,126         1,799,585         1,032,790         1,398,542         16,952,043  
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
 
  
 
 
 
2021
 
Type
  
 
 
 
Less than

1 year
 
 
1~5 Years
 
 
More than

5 years
 
 
Other (*)
 
 
Total
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
In millions of won
 
Cash and cash equivalents
           2,635,238       —         —         —         2,635,238  
Financial assets at fair value through other comprehensive income
             —         —         —         435,107       435,107  
Financial assets at amortized cost
             15,422       9,840       11       —         25,273  
Loans
             88,396       443,146       407,584       —         939,126  
Long-term/short-term financial instruments
             1,278,014       171,636       286       278,572       1,728,508  
Financial assets at fair value through profit or loss
             360,833       346       3,130       668,555       1,032,864  
Trade and other receivables
             8,123,455       1,233,703       679,048       —         10,036,206  
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
             12,501,358         1,858,671         1,090,059         1,382,234         16,832,322  
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
  (*)
The maturities cannot be presently determined.
 
Derivative liabilities classified by maturity periods which from reporting date to maturity date of contracts
 
Derivative liabilities classified by maturity periods which from reporting date to maturity dates as per the contracts as of December 31, 2020 and 2021 are as follows:
 

 
 
 
 
  
2020
 
Type
 
 
 
  
Less than

1 year
 
 
1~2 Years
 
 
2~5 Years
 
 
More than

5 years
 
 
Total
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
In millions of won
 
Net settlement
 
  
 
 
 
 
—Trading
           —         —         —         —         —    
Gross settlement
                                                
—Trading
             (12,777     (22,827     (118,704     (4,380     (158,688
—Hedging
             (37,858     (39,528     (75,450     (55,208     (208,044
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
             (50,635     (62,355     (194,154     (59,588     (366,732
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
     
          
2021
 
Type
        
Less than

1 year
   
1~2 Years
   
2~5 Years
   
More than

5 years
   
Total
 
                                      
          
In millions of won
 
Net settlement
                                                
—Trading
           —         —         —         —         —    
Gross settlement
                                                
—Trading
             (6,628     (4,954     (33,635     (2,291     (47,508
—Hedging
             (2,555     (638     (1,914     (23,704     (28,811
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
             (9,183     (5,592     (35,549     (25,995     (76,319
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Derivative assets classified by maturity periods which from reporting date to maturity dates as per the contracts
Derivative assets classified by maturity periods which from reporting date to maturity dates as per the contracts as of December 31, 2020 and 2021 are as follows:
 
 
 
 
 
  
2020
 
Type
 
 
 
  
Less than

1 year
 
 
1~2 Years
 
 
2~5 Years
 
 
More than

5 years
 
 
Total
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
In millions of won
 
Net settlement
 
  
 
 
 
 
—Trading
           —         —         —         —         —    
Gross settlement
                                                
—Trading
             18,332       1,529       45,237       52,163       117,261  
—Hedging
             11,191       —         41,206       3,252       55,649  
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
             29,523       1,529       86,443       55,415       172,910  
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
     
          
2021
 
Type
        
Less than

1 year
   
1~2 Years
   
2~5 Years
   
More than

5 years
   
Total
 
                                      
          
In millions of won
 
Net settlement
                                                
—Trading
           —         —         —         —         —    
Gross settlement
                                                
—Trading
             93,554       54,617       202,663       105,856       456,690  
—Hedging
             33,564       65,198       102,760       3,235       204,757  
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
             127,118       119,815       305,423       109,091       661,447  
            
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Fair value and book value of financial assets and liabilities Fair value and book value of financial assets and liabilities as of December 31, 2020 and 2021 are as follows:
 
 
  
 
 
  
2020
 
  
2021
 
Type
  
 
 
  
Book value
 
  
Fair value
 
  
Book value
 
  
Fair value
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
 
 
  
In millions of won
 
Assets recognized at fair value
  
  
  
  
  
Financial assets at fair value through other comprehensive income
            358,559        358,559        435,107        435,107  
Derivative assets (trading)
              110,764        110,764        443,027        443,027  
Derivative assets (applying hedge accounting)
              55,649        55,649        204,756        204,756  
Financial assets at fair value through profit or loss
              1,881,382        1,881,382        1,032,864        1,032,864  
             
 
 
    
 
 
    
 
 
    
 
 
 
              2,406,354        2,406,354        2,115,754        2,115,754  
             
 
 
    
 
 
    
 
 
    
 
 
 
Assets carried at amortized cost
                                            
Financial assets at amortized cost
            14,422        14,422        25,273        25,273  
Loans and receivables
              790,162        790,162        909,071        909,071  
Trade and other receivables
              9,780,039        9,780,039        10,029,276        10,029,276  
Long-term financial instruments
              578,621        578,621        450,494        450,494  
Short-term financial instruments
              1,483,482        1,483,482        1,278,014        1,278,014  
Cash and cash equivalents
              2,029,584        2,029,584        2,635,238        2,635,238  
             
 
 
    
 
 
    
 
 
    
 
 
 
              14,676,310        14,676,310        15,327,366        15,327,366  
             
 
 
    
 
 
    
 
 
    
 
 
 
Liabilities recognized at fair value
                                            
Derivative liabilities (trading)
            157,926        157,926        56,256        56,256  
Derivative liabilities (applying hedge accounting)
              207,193        207,193        21,775        21,775  
             
 
 
    
 
 
    
 
 
    
 
 
 
              365,119        365,119        78,031        78,031  
             
 
 
    
 
 
    
 
 
    
 
 
 
Liabilities carried at amortized cost
                                            
Secured borrowings
            63,614        63,614        176,358        176,358  
Unsecured bond
              64,607,401        68,839,316        73,881,671        69,803,043  
Lease liabilities
              4,621,096        4,621,096        4,410,503        4,410,503  
Unsecured borrowings
              4,808,206        5,513,242        6,471,484        5,938,613  
Trade and other payables(*)
              8,115,837        8,115,837        9,739,421        9,739,421  
Bank overdraft
              245,360        245,360        —          —    
             
 
 
    
 
 
    
 
 
    
 
 
 
              82,461,514        87,398,465        94,679,437        90,067,938  
             
 
 
    
 
 
    
 
 
    
 
 
 
 
 
(*)
Excludes lease liabilities.
 
Interest rates used for determining fair value
The discount
rates
used for calculating fair value as of December 31, 2020 and 2021 are as follows:
 
Type
  
2020
 
  
2021
 
Derivatives
     (-) 0.73% ~ 3.08%        (-) 0.63% ~ 3.88%  
Borrowings and debt securities
     (-) 0.53% ~ 4.38%        (-) 0.30% ~ 4.38%  
Finance lease
     0.57% ~ 16.60%        0.00% ~ 16.83%  
 
Fair value hierarchy
Fair values of financial instruments by hierarchy level as of December 31, 2020 and 2021 are as follows:
 
 
  
 
 
  
2020
 
Type
  
 
 
  
Level 1
 
  
Level 2
 
  
Level 3
 
  
Total
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
 
 
  
In millions of won
 
Financial assets at fair value
  
     
  
     
  
     
  
     
  
     
Financial assets at fair value through other comprehensive income
            194,670        —          163,889        358,559  
Derivative assets
              —          166,413        —          166,413  
Financial assets at fair value through profit or loss
              —          1,875,690        5,692        1,881,382  
             
 
 
    
 
 
    
 
 
    
 
 
 
              194,670        2,042,103        169,581        2,406,354  
             
 
 
    
 
 
    
 
 
    
 
 
 
Financial liabilities at fair value
                                            
Derivative liabilities
            —          365,119        —          365,119  
             
 
 
    
 
 
    
 
 
    
 
 
 
 
 
  
 
 
  
2021
 
Type
  
 
 
  
Level 1
 
  
Level 2
 
  
Level 3
 
  
Total
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
 
 
  
In millions of won
 
Financial assets at fair value
  
     
  
     
  
     
  
     
  
     
Financial assets at fair value through other comprehensive income
            273,826        —          161,281        435,107  
Derivative assets
              —          647,783        —          647,783  
Financial assets at fair value through profit or loss
              —          1,027,067        5,797        1,032,864  
             
 
 
    
 
 
    
 
 
    
 
 
 
              273,826        1,674,850        167,078        2,115,754  
             
 
 
    
 
 
    
 
 
    
 
 
 
Financial liabilities at fair value
                                            
Derivative liabilities
            —          78,031        —          78,031  
             
 
 
    
 
 
    
 
 
    
 
 
 
Changes of financial assets and liabilities which are classified as level 3
 
Changes of financial assets and liabilities which are classified as level 3 for the years ended December 31, 2020 and 2021 are as follows:
 
 
 
 
 
 
2020
 
 
 
 
 
 
Beginning
balance
 
 
Acquisitions
 
 
Reclassified
category
 
 
Valuation
 
 
Disposal
 
 
Foreign
currency
translation
and others
 
 
Ending
balance
 
 
 
 
 
 
In millions of won
 
Financial assets at fair value
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
Financial assets at fair value through profit or loss Cooperative
          5,156       359       —         623       (446     —         5,692  
Financial assets at fair value through other comprehensive income
                                                               
Unlisted securities
            177,968       2,900       —         (23,128     (1     6,150        163,889  
     
         
2021
 
         
Beginning
balance
   
Acquisitions
   
Reclassified
category
   
Valuation
   
Disposal
   
Foreign
currency
translation
and others
   
Ending
balance
 
         
In millions of won
 
Financial assets at fair value
                                                               
Financial assets at fair value through profit or loss Cooperative
          5,692       —         —         105       —         —         5,797  
Financial assets at fair value through other comprehensive income
                                                               
Unlisted securities
            163,889       8,929       —         (12,335       (13        320       160,790  
Debt securities
            —         500       —         —         —         (9     491