| 27. | Provisions |
| (a) | Provisions as of December 31, 2016 and 2017 are as follows: |
| 2016 | 2017 | |||||||
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Asset retirement obligations |
50,738 | 45,495 | ||||||
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Expected loss related to litigation |
34,471 | 32,650 | ||||||
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Unused credit commitments |
450,997 | 168,006 | ||||||
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Bonus card points program |
25,425 | 26,434 | ||||||
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Financial guarantee contracts issued |
79,238 | 80,861 | ||||||
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Others |
88,019 | 75,512 | ||||||
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| 728,888 | 428,958 | |||||||
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| (b) | Changes in provisions for the years ended December 31, 2016 and 2017 were as follows: |
| 2016 | ||||||||||||||||||||||||||||
| Asset retirement |
Litigation | Unused credit |
Card point (*2) |
Guarantee | Other | Total | ||||||||||||||||||||||
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Beginning balance |
48,434 | 25,945 | 434,941 | 27,649 | 81,374 | 80,445 | 698,788 | |||||||||||||||||||||
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Provision |
2,714 | 11,387 | 15,419 | 51,745 | 3,887 | 25,174 | 110,326 | |||||||||||||||||||||
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Provision used |
(2,647 | ) | (3,226 | ) | — | (54,300 | ) | — | (17,649 | ) | (77,822 | ) | ||||||||||||||||
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Foreign exchange translation |
— | 365 | 637 | — | 993 | 60 | 2,055 | |||||||||||||||||||||
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Others(*1) |
2,237 | — | — | 331 | (7,016 | ) | (11 | ) | (4,459 | ) | ||||||||||||||||||
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Ending balance |
50,738 | 34,471 | 450,997 | 25,425 | 79,238 | 88,019 | 728,888 | |||||||||||||||||||||
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| 2017 | ||||||||||||||||||||||||||||
| Asset retirement |
Litigation | Unused credit |
Card point (*2) |
Guarantee | Other | Total | ||||||||||||||||||||||
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Beginning balance |
50,738 | 34,471 | 450,997 | 25,425 | 79,238 | 88,019 | 728,888 | |||||||||||||||||||||
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Provision(reversal) |
(4,562 | ) | 704 | (279,508 | ) | 51,294 | 2,548 | 11,797 | (217,727 | ) | ||||||||||||||||||
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Provision used |
(2,695 | ) | (1,908 | ) | — | (50,285 | ) | (132 | ) | (22,637 | ) | (77,657 | ) | |||||||||||||||
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Foreign exchange translation |
— | (617 | ) | (3,483 | ) | — | (4,458 | ) | (52 | ) | (8,610 | ) | ||||||||||||||||
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Others(*1) |
2,014 | — | — | — | 3,665 | (1,615 | ) | 4,064 | ||||||||||||||||||||
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Ending balance |
45,495 | 32,650 | 168,006 | 26,434 | 80,861 | 75,512 | 428,958 | |||||||||||||||||||||
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| (*1) | Others include the effects of decrease in discount and changes in discount rate. |
| (*2) | Provisions for card point were classified as fees and commission expense. |
| (c) | Asset retirement obligation liabilities represent the estimated cost to restore the existing leased properties which is discounted to the present value using the appropriate discount rate at the end of the reporting period. Disbursements of such costs are expected to incur at the end of lease contract. Such costs are reasonably estimated using the average lease year and the average restoration expenses. The average lease year is calculated based on the past ten-year historical data of the expired leases. The average restoration expense is calculated based on the actual costs incurred for the past three years using the three-year average inflation rate. |
| (d) | Allowance for guarantees and acceptances as of December 31, 2016 and 2017 are as follows: |
| 2016 | 2017 | |||||||
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Guarantees and acceptances outstanding |
9,324,734 | 7,611,211 | ||||||
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Contingent guarantees and acceptances |
2,997,553 | 3,259,613 | ||||||
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ABS and ABCP purchase commitments |
2,060,089 | 2,035,543 | ||||||
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Endorsed bill |
32,187 | 85,456 | ||||||
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| 14,414,563 | 12,991,823 | |||||||
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Allowance for loss on guarantees and acceptances |
79,238 | 80,861 | ||||||
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Ratio |
% | 0.55 | 0.62 | |||||