KB Financial Q1 Net Profit 1.2701 Trillion Won... "Record Quarterly Performance" (Comprehensive)

74.1% Increase Compared to Same Period Last Year
Strong Performance in Non-Banking Sector... Accounts for 48.6% of Total Net Profit

[Asia Economy Reporter Park Sun-mi] KB Financial Group achieved its highest quarterly performance since its founding in the first quarter of this year, thanks to efforts to strengthen core competitiveness and business diversification through mergers and acquisitions (M&A).

On the 22nd, KB Financial announced that its net profit for the first quarter reached KRW 1.2701 trillion. Core group earnings, centered on net interest income and net fee income, steadily increased, while other operating income, which had suffered due to the sharp volatility in the financial market in the first quarter of last year, improved significantly, resulting in a 74.1% increase compared to the same period last year (KRW 729.5 billion).

Net interest income increased by 12.5% year-on-year, supported by M&A such as the acquisition of Prudential Life and steady loan growth at the bank. Compared to the previous quarter, it also rose by 2.5%, influenced by an improvement in the group’s net interest margin (NIM). In the first quarter, the group and the bank recorded NIMs of 1.82% and 1.56%, respectively, continuing the expansion trend from the fourth quarter. The bank’s NIM improved by 5 basis points quarter-on-quarter due to steady growth in core deposits and an increased proportion of low-cost deposits within total deposits, easing overall funding cost burdens. The group’s NIM expanded by 7 basis points quarter-on-quarter, reflecting the rise in the bank’s NIM and improved profitability of card assets centered on installment financing.

Net fee income increased by 44.3% year-on-year, or KRW 297.1 billion, driven by a booming stock market that significantly boosted securities brokerage fees, improved trust income at the bank, and increased card merchant fees amid recent consumer recovery trends. Notably, trust income at the bank, which had been somewhat sluggish due to regulatory and market condition deterioration, largely recovered thanks to increased sales of ETFs and ELS in this first quarter. Additionally, the securities IB (investment banking) business secured market competitiveness, recording net fee income exceeding KRW 900 billion for the first time on a quarterly basis, further strengthening the group’s profit base in the non-interest sector.

Other operating income in the first quarter increased by KRW 311.2 billion year-on-year, as the large losses related to securities, derivatives, and foreign exchange caused by the sharp volatility in the financial market in the first quarter of last year disappeared, and the consolidation effect of Prudential Life’s performance was reflected this quarter. Compared to the previous quarter, it rose by KRW 155.2 billion due to the recovery of insurance profits and overall improvement in S&T (sales and trading) operations, including ELS self-hedging profits in securities.

The group’s return on equity (ROE) for the first quarter was 12.50%, reflecting the fruits of increased core earnings, diversification of the group’s revenue base, and risk management efforts. The group’s BIS capital adequacy ratio stood at 16.00%, and the common equity tier 1 (CET1) ratio was 13.75%, maintaining the highest level of capital soundness in the domestic financial sector. Asset quality was also stably managed, with the non-performing loan (NPL) ratio at 0.42%.

As of the end of March, the group’s total assets amounted to KRW 620.9 trillion, and including assets under management (AUM), KRW 974.8 trillion. On a consolidated basis, total assets increased by 1.7% compared to KRW 610.7 trillion at the end of last year. Major affiliates’ total assets were as follows: KB Kookmin Bank KRW 447.8 trillion (KRW 505.7 trillion including AUM), KB Securities KRW 56.8 trillion (KRW 226.9 trillion including AUM), KB Insurance KRW 39.3 trillion, KB Kookmin Card KRW 25.1 trillion, and Prudential Life KRW 25 trillion.

How did each affiliate perform?

The group’s profit-generating capacity has significantly improved through balanced growth between banking and non-banking sectors and diversification of the revenue base.

KB Kookmin Bank’s net profit for the first quarter was KRW 688.6 billion, up 17.4% (KRW 102.3 billion) year-on-year, driven by M&A effects such as Prasac and Bukopin Bank, steady loan growth last year boosting interest income, and improved fee income centered on trust income. The bank focused on strengthening its profit base through solid management, including a 5 basis point improvement in net interest margin following the previous quarter and overseas expansion, reinforcing its position as a leading bank.

KB Securities recorded a net profit of KRW 221.1 billion in the first quarter, achieving its highest quarterly performance ever, as stock trading volume surged amid a booming stock market.

KB Insurance posted a net profit of KRW 68.8 billion in the first quarter, achieving stable results due to a decline in loss ratio and improved investment income.

KB Kookmin Card’s net profit was KRW 141.5 billion, an increase of KRW 72 billion compared to the previous quarter. This was due to increased net fee income from continuous marketing cost efficiency efforts and the disappearance of one-off factors such as proactive COVID-19-related loan loss provisions and voluntary retirement costs from the previous quarter.

Prudential Life’s net profit was KRW 112.1 billion, driven by a favorable financial market environment with rising market interest rates and stock indices, which reduced reserve burdens for variable insurance products, and overall improved investment income through flexible portfolio rebalancing.

A KB Financial Group official commented, “Over the past year, the group has meaningfully expanded its profit-generating capacity across all sectors, secured additional growth momentum in capital markets and insurance businesses, and demonstrated excellent asset quality management, resulting in more stable and sound profit generation for the group.”

"Non-banking sector share expanded to 48.6%"

He added, “As major affiliates such as securities and insurance enhanced core competitiveness and strengthened profit resilience, the non-banking sector’s share of KB Financial Group’s net profit expanded to about 48.6% in the first quarter. This reflects efforts to continuously strengthen competitiveness in the group’s core business sectors, such as securities enhancing market dominance across all business units including brokerage, wealth management (WM), investment banking (IB), and capital markets, and insurance affiliates recovering profitability based on improved loss ratios and expanding life insurance competitiveness through the acquisition of Prudential Life.”

At the earnings announcement event, KB Financial Group also detailed the group’s competitiveness in non-face-to-face channels in response to the rapid shift of financial transactions to digital channels amid the recent expansion of non-face-to-face services.

The group’s chief financial officer stated, “As of the end of last year, KB Financial Group has secured over 10 million digital customers, accounting for 44% of the group’s total active customers. KB Star Banking, the group’s representative digital platform, currently has about 8 million monthly active users (MAU), maintaining its industry-leading position.”

He further stated, “KB will continue to strengthen the competitiveness of non-face-to-face channels while providing more specialized consultations and tailored products in face-to-face channels for areas where personal interaction is important, such as asset management and loan counseling. By closely linking non-face-to-face and face-to-face channels to maximize customer convenience and satisfaction, we will strive to grow as a solid leading financial group amid the paradigm shift in the future financial industry.”

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