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Other Financial Assets and Liabilities | 12 Months Ended
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Dec. 31, 2020
Text block [abstract] |
Other Financial Assets and Liabilities |
7. | Other Financial Assets and Liabilitie s
Details of other financial assets and liabilities as at December 31, 2019 and 2020, are as follows:
(In millions of Korean won) |  | December 31, 2019 |  |  | December 31, 2020 |
Other financial assets |  |  |  |  |  |  |  |
Financial assets at amortized cost 1 |  | ￦ | 441,804 |  |  | ￦ | 671,068 |
Financial assets at fair value through profit or loss 1,2,3 |  |  | 632,324 |  |  |  | 809,919 |
Financial assets at fair value through other comprehensive income 1,3 |  |  | 557,342 |  |  |  | 258,516 |
Derivative used for hedging |  |  | 58,576 |  |  |  | 7,684 |
Less: Non-current |  |  | (821,658 | ) |  |  | (544,347 | )
Current |  | ￦ | 868,388 |  |  | ￦ | 1,202,840 |
Other financial liabilities |  |  |  |  |  |  |  |
Financial liabilities at amortized cost |  | ￦ | 129,945 |  |  | ￦ | 132,558 |
Financial liabilities at fair value through profit or loss |  |  | 38 |  |  |  | 2,682 |
Derivatives used for hedging |  |  | 20,096 |  |  |  | 127,929 |
Less: Non-current |  |  | (149,136 | ) |  |  | (260,676 | )
Current |  | ￦ | 943 |  |  | ￦ | 2,493 |
1 | As at December 31, 2020, the Group’s other financial assets amounting to ￦ 104,442 million (2019: ￦ 91,445 million), which consist of checking account deposits and payment guarantee, are subject to withdrawal restrictions.
2 | As at December 31, 2020, MMW (Money Market Wrap) and MMT (Money Market Trust) amounting to ￦ 509,068 million (2019: ￦ 406,062 million) is included in other financial assets.
3 | As at December 31, 2020, the Group provided investments in Korea Software Financial Cooperative amounting to ￦ 5,491 million (2019: ￦ 1,849 million) as a collateral for the payment guarantee provided by the Cooperative.
Details of financial assets at fair value through profit or loss as at December 31, 2019 and 2020, are as follows:
(In millions of Korean won) |  | December 31, 2019 |  |  | December 31, 2020 |
Equity Instruments (Listed) |  | ￦ | 232 |  |  | ￦ | 46,449 |
Equity Instruments (Unlisted) |  |  | 90,357 |  |  |  | 83,017 |
Debt securities |  |  | 541,657 |  |  |  | 680,453 |
Derivatives held for trading |  |  | 78 |  |  |  | — |
Total |  |  | 632,324 |  |  |  | 809,919 |
Less: non-current |  |  | (219,026 | ) |  |  | (276,109 | )
Current |  | ￦ | 413,298 |  |  | ￦ | 533,810 |
The maximum exposure of debt instruments of financial assets recognized at fair value through profit or loss to credit risk is the carrying amount as at December 31, 2020. Details of financial assets at fair value through other comprehensive income as at December 31, 2019 and 2020, are as follows:
(In millions of Korean won) |  | December 31, 2019 |  |  | December 31, 2020 |
Equity Instruments (Listed) |  | ￦ | 6,738 |  |  | ￦ | 6,216 |
Equity Instruments (Unlisted) |  |  | 543,518 |  |  |  | 245,730 |
Debt securities |  |  | 7,086 |  |  |  | 6,570 |
Total |  |  | 557,342 |  |  |  | 258,516 |
Less: non-current |  |  | (556,147 | ) |  |  | (258,516 | )
Current |  | ￦ | 1,195 |  |  | ￦ | — |
Upon disposal of these equity investments, any balance within the accumulated other comprehensive income for these equity investments is not classified to profit or loss, but to retained earnings. Upon disposal of debt investments, remaining balance of the accumulated other comprehensive income of debt instruments is reclassified to profit or loss. In 2020, the Group disposed shares of Mastercard Inc. amounting to ￦ 350,777 million at fair value. Upon disposal, ￦ 265,087 million is reclassified as accumulated other comprehensive income after tax and ￦ 184,330 million is reclassified as retained earnings of attributable to owners of the controlling company. Derivatives used for hedg ing as at December 31, 2019 and 2020, are as follows:
|  | December 31, 2019 |  |  | December 31, 2020 |
(In millions of Korean won) |  | Assets |  |  | Liabilities |  |  | Assets |  |  | Liabilities |
Interest rate swap 1 |  | ￦ | — |  |  | ￦ | 1,464 |  |  | ￦ | — |  |  | ￦ | 1,078 |
Currency swap 2 |  |  | 55,569 |  |  |  | 18,632 |  |  |  | 7,684 |  |  |  | 126,189 |
Currency forwards 3 |  |  | 3,007 |  |  |  | — |  |  |  | — |  |  |  | 662 |
Total |  |  | 58,576 |  |  |  | 20,096 |  |  |  | 7,684 |  |  |  | 127,929 |
Less: non-current |  |  | (28,304 | ) |  |  | (19,177 | ) |  |  | (2,111 | ) |  |  | (126,408 | )
Current |  | ￦ | 30,272 |  |  | ￦ | 919 |  |  | ￦ | 5,573 |  |  | ￦ | 1,521 |
1 | The interest rate swap contract is to hedge the risk of variability in future fair value of the borrowings.
2 | The currency swap contract is to hedge the risk of variability in cash flow from the borrowings. In applying the cash flow hedge accounting, the Group hedges its exposures to cash flow fluctuation until September 7, 2034.
3 | The currency forward contract is to hedge the risk of variability in cash flow from transactions in foreign currencies due to changes in foreign exchange rate.
The full value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months. The valuation gains and losses on the derivatives contracts for the years ended December 31, 2018, 2019 and 2020, are as follows:
(In millions of Korean won) |  | 2018 |  |  | 2019 |  |  | 2020 |
Type of Transaction |  | Valuation gain |  |  | Valuation loss |  |  | Other comprehensive income 1 |  |  | Valuation gain |  |  | Valuation loss |  |  | Other comprehensive income 1 |  |  | Valuation gain |  |  | Valuation Loss |  |  | Other comprehensive income 1 |
Interest rate swap |  | ￦ | 192 |  |  | ￦ | — |  |  | ￦ | (488) |  |  | ￦ | — |  |  | ￦ | 45 |  |  | ￦ | (963) |  |  | ￦ | — |  |  | ￦ | — |  |  | ￦ | (567) |
Currency swap |  |  | 58,912 |  |  |  | 2,045 |  |  |  | 22,139 |  |  |  | 72,417 |  |  |  | 15,784 |  |  |  | 87,626 |  |  |  | — |  |  |  | 161,661 |  |  |  | (113,175 | )
Currency forwards |  |  | 7,201 |  |  |  | — |  |  |  | — |  |  |  | 4,858 |  |  |  | — |  |  |  | 4,858 |  |  |  | — |  |  |  | 2,049 |  |  |  | — |
Total |  | ￦ | 66,305 |  |  | ￦ | 2,045 |  |  | ￦ | 21,651 |  |  | ￦ | 77,275 |  |  | ￦ | 15,829 |  |  | ￦ | 91,521 |  |  | ￦ | — |  |  | ￦ | 163,710 |  |  | ￦ | (113,742) |
1 | The amounts before adjustments of deferred income tax directly reflected in equity and allocation to the non-controlling interest.
The ineffective portion recognized in profit or loss on the cash flow hedge is valuation loss of ￦ 2,711 million for the current period (2018: valuation gain of ￦ 263 million, 2019: valuation gain of ￦ 4,181 million). The unsettled amount of derivative instruments for the years ended December 31, 2020 and 2019, are as follows: (i) Hedging instruments
(In millions of Korean won and thousands of foreign currencies) |  | 2019 |
|  |  |  |  |  |  | Book value of hedging instruments |  |  | Changes in fair value to calculate the ineffective portion of hedges |
Currency |  | Foreign currency |  |  | Contract amount |  |  | Assets |  |  | Liabilities |
USD |  |  | 1,574,068 |  |  | ￦ | 1,788,831 |  |  | ￦ | 30,175 |  |  | ￦ | 10,692 |  |  | ￦ | 49,480 |
JPY |  |  | 80,000,000 |  |  |  | 827,292 |  |  |  | 28,401 |  |  |  | 9,404 |  |  |  | 15,396 |
Total |  |  |  |  |  | ￦ | 2,616,123 |  |  | ￦ | 58,576 |  |  | ￦ | 20,096 |  |  | ￦ | 64,876 |
(In millions of Korean won and thousands of foreign currencies) |  | 2020 |
|  |  |  |  |  |  | Book value of hedging instruments |  |  | Changes in fair value to calculate the ineffective portion of hedges |
Currency |  | Foreign currency |  |  | Contract amount |  |  | Assets |  |  | Liabilities |
USD |  |  | 1,768,912 |  |  | ￦ | 2,037,568 |  |  | ￦ | 2,111 |  |  | ￦ | 100,623 |  |  | ￦ | (136,852 | )
JPY |  |  | 46,000,000 |  |  |  | 488,924 |  |  |  | 5,573 |  |  |  | 13,839 |  |  |  | (4,065 | )
SGD |  |  | 284,000 |  |  |  | 245,208 |  |  |  | — |  |  |  | 13,467 |  |  |  | (13,611 | )
Total |  |  |  |  |  | ￦ | 2,771,700 |  |  | ￦ | 7,684 |  |  | ￦ | 127,929 |  |  | ￦ | (154,528 | )
(ii) Hedged item
(In millions of Korean won) |  |  |  |  |  |
| 2019 |  |  | 2020 |
Currency |  | Book value of hedged items |  |  | Changes in fair value to calculate the ineffective portion of hedges |  |  | Cash flow hedge reserves 1 |  |  | Book value of hedged items |  |  | Changes in fair value to calculate the ineffective portion of hedges |  |  | Cash flow hedge reserves 1 |
USD |  | ￦ | 1,822,477 |  |  | ￦ | (45,855 | ) |  | ￦ | (5,214 | ) |  | ￦ | 1,924,576 |  |  | ￦ | 133,978 |  |  | ￦ | 19,641 |
JPY |  |  | 850,776 |  |  |  | (14,841 | ) |  |  | (2,395 | ) |  |  | 484,960 |  |  |  | 4,228 |  |  |  | (2,569 | )
SGD |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 233,510 |  |  |  | 13,611 |  |  |  | 2,707 |
Total |  | ￦ | 2,673,253 |  |  | ￦ | (60,696 | ) |  | ￦ | (7,609 | ) |  | ￦ | 2,643,046 |  |  | ￦ | 151,817 |  |  | ￦ | 19,779 |
1 | The amounts after adjustments of deferred income tax directly reflected in equity.
Details of financial liabilities at fair value through profit or loss as at December 31, 2019 and 2020, are as follows:
(In millions of Korean won) |  | December 31, 2019 |  |  | December 31, 2020 |
Financial liabilities at fair value through profit or loss |  |  |  |  |  |  |  |
Derivative liabilities held for trading |  | ￦ | 38 |  |  | ￦ | 45 |
Conversion Rights and Redemption Rights |  |  | — |  |  |  | 2,637 |
Total |  | ￦ | 38 |  |  | ￦ | 2,682 |
The valuation gain and loss on financial liabilities at fair value through profit or loss for the years ended December 31, 2018, 2019 and 2020, are as follows:
|  | 2018 |  |  | 2019 |  |  | 2020 |
(In millions of Korean won) |  | Valuation gain |  |  | Valuation loss |  |  | Valuation gain |  |  | Valuation loss |  |  | Valuation gain |  |  | Valuation loss |
Derivative liabilities held for trading |  | ￦ | — |  |  | ￦ | 2,707 |  |  | ￦ | 78 |  |  | ￦ | 2,014 |  |  | ￦ | 10 |  |  | ￦ | 53 |
Conversion Rights and Redemption Rights |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 162 |  |  |  | — |
Total |  | ￦ | — |  |  | ￦ | 2,707 |  |  | ￦ | 78 |  |  | ￦ | 2,014 |  |  | ￦ | 172 |  |  | ￦ | 53 |

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