KB Financial Group Posts Surprise Record Q3 Net Profit of 1.1666 Trillion Won (Comprehensive)

Net Income Reaches 1.1666 Trillion KRW, Up 18.8% from Previous Quarter

[Asia Economy Reporter Park Sun-mi] KB Financial Group announced quarterly earnings exceeding 1 trillion won, setting an all-time high record despite the COVID-19 pandemic situation.

On the 22nd, KB Financial Group announced its third-quarter management performance, reporting a third-quarter net profit of 1.1666 trillion won, an 18.8% increase compared to the previous quarter. This was influenced by steady growth in net interest income and net fee income, the base effect from the proactive additional loan loss provisions made in the second quarter (approximately 149 billion won after tax), and the gain on bargain purchase (145 billion won) related to the acquisition of Prudential Life Insurance.

Excluding major one-off factors, the recurring net profit remained in the high 900 billion won range, maintaining a stable performance trend amid recession concerns, supported by increases in core earnings such as interest income and fee income, as well as conservative soundness management.

The cumulative net profit for the third quarter was 2.8779 trillion won, up 3.6% year-on-year. This is interpreted as the result of increased net interest income based on solid loan growth and expanded net fee income efforts, despite the net interest margin (NIM) contraction cycle following a 75 basis point base rate cut this year. Excluding one-off factors such as last year's voluntary retirement costs, this year's additional loan loss provisions, and bargain purchase gains, the recurring basis showed a 5.1% growth, reaffirming robust profit resilience.

Regarding this performance, a KB Financial Group official stated, "Despite the challenging business environment caused by the economic recession triggered by COVID-19 and interest rate declines this year, we demonstrated stable results following the previous quarter as a result of continuous efforts to strengthen our business portfolio and diversify our revenue base." They added, "In particular, during a period when interest rate declines burden the profitability of banking, the expansion of brokerage fees in securities and improved performance in the IB sector helped maintain the group's profit resilience steadily."

Reviewing Group Segment Performance...

KB Financial's cumulative third-quarter net interest income was 7.1434 trillion won, an increase of 274.8 billion won compared to the same period last year. Despite the NIM decline due to falling interest rates, net interest income increased by 4.0% year-on-year, reflecting solid loan growth in banking and card sectors and the consolidation effect of the Cambodian Prasac acquisition in April. KB Financial's NIM for the third quarter this year was 1.73%, and the bank's NIM was 1.49%.

The cumulative third-quarter net fee income was 2.1705 trillion won, up 454 billion won year-on-year. Despite a difficult business environment marked by recession and reduced financial product sales, net fee income increased by 26.4% year-on-year, driven by significant growth in non-bank affiliates' performance, including increased customer trust assets in securities, improved IB performance, and increased card merchant fees.

How Did Major Affiliates Perform?

KB Kookmin Bank's third-quarter net profit was 635.6 billion won, down 3.8% from the previous quarter. The cumulative net profit also decreased by 6.2% year-on-year to 1.8824 trillion won. Despite solid interest income growth based on loan growth and the acquisition of Cambodian microfinance institution Prasac, the bank was affected by additional loan loss provisions (approximately 115 billion won after tax) set aside in the second quarter reflecting a conservative future economic outlook.

During a period when interest rate declines burden banking profitability, securities showed remarkable earnings growth. KB Securities' third-quarter net profit was 209.7 billion won, a 39.6% increase from the previous quarter. The cumulative third-quarter net profit was 338.5 billion won, up 50.6% year-on-year. This was influenced by a significant increase in securities commission fees, including approximately 244 billion won from increased customer trust assets and about 29 billion won from expanded investment banking (IB) fees due to active IB business expansion and support.

KB Insurance's third-quarter net profit was 42.6 billion won, down 36.2% from the previous quarter, and the cumulative net profit was 186.6 billion won, a 20.2% decrease year-on-year. This was mainly due to poor insurance profits caused by rising loss ratios in automobile and long-term insurance. KB Kookmin Card recorded a third-quarter net profit of 91.4 billion won in 2020. The elimination of special factors such as additional loan loss provisions (approximately 23 billion won after tax) in the second quarter and improved asset quality, including a decline in delinquency rates on high-risk assets such as card loans, led to an 11.9% increase compared to the previous quarter due to a decrease in credit loss provisions.

This content was produced with the assistance of AI translation services.