KB Financial, Net Profit of 2.7 Trillion Won in H1 Due to Interest Increase... Dividend of 500 Won per Share

Net Profit for First Half Up 11% to KRW 27.566 Trillion
KB Kookmin Bank First in Banking Sector to Surpass KRW 500 Trillion in Total Assets
Second Share Buyback This Year... KRW 150 Billion in Scale

Among Non-Banking Affiliates, KB Securities Performance Drops Sharply
Pure Fee Income Also Down 2.3% Due to Financial Market Slump

[Asia Economy Reporter Song Seung-seop] KB Financial Group recorded a net profit of 2.7566 trillion KRW in the first half of this year. This was thanks to high earnings in the interest sector as the net interest margin expanded significantly due to the base interest rate hike. On the same day, a quarterly dividend of 500 KRW per share and a share repurchase cancellation worth 1.5 trillion KRW were also decided to enhance shareholder value.

According to the 2022 first half management performance data announced by KB Financial Group on the 21st, net profit increased by 282.3 billion KRW (11.4%) compared to the same period last year. This was influenced by an increase in net interest income driven by the expansion of net interest margin (NIM) and loan growth, as well as cost management.

Quarterly net profit was 1.3035 trillion KRW, down 10.3% from the first quarter. KB Financial Group explained that this was due to other operating losses caused by rising market interest rates and exchange rates, a decline in stock indices, and additional provisions reflecting a conservative future economic outlook scenario. Excluding one-time factors, recurring net profit decreased by about 2.4%.

The performance was led by the major affiliate KB Kookmin Bank. Interest income increased through loan growth, resulting in a 21.4% rise in net profit for the first half to 1.7264 trillion KRW. This accounts for more than half of the group's total net profit. Total assets also grew 2.8% from the first quarter to 506.8 trillion KRW, surpassing 500 trillion KRW for the first time in the banking sector. However, KB Kookmin Bank's quarterly net profit shrank by 23.4% from the first quarter to 749.1 billion KRW.

As of the end of last month, won-denominated loans stood at 323 trillion KRW, up 1.2% from the end of last year and 0.4% growth compared to the end of March. Corporate loans increased by 5.5% and 2.1%, respectively, due to expanded funding demand amid ongoing COVID-19 financial support. On the other hand, household loans shrank by 2.5% compared to the end of last year due to loan regulations and decreased demand.

Among non-bank affiliates, KB Securities saw a significant decline in growth. This was due to factors such as rising interest rates, falling stock indices, and increased financial market volatility. Net profit for the first half was 182 billion KRW, down 51.4% compared to the first half of last year. Quarterly revenue was 67.7 billion KRW, a 55.8% decrease from the previous quarter.

"Second time this year"... Decision to cancel 150 billion KRW worth of treasury shares

The group's overall net interest income was 5.4418 trillion KRW, an 18.7% increase from the first half of last year. This was due to the expansion of NIM and loan growth effects within the group. The group's NIM for the second quarter was 1.96%, and the bank's was 1.73%. The bank's NIM rose by 0.07 percentage points from the previous quarter due to the base interest rate hikes that have continued since August last year.

On the other hand, net fee income in the first half decreased by 2.3% compared to the same period last year due to sluggish trust and fund-related performance amid domestic and international financial market downturns and overall financial product sales contraction. Net fee income for the second quarter was 874.9 billion KRW, down 4.4% from the previous quarter, affected by decreased sales performance of trust products at the bank.

Other operating income and losses also showed poor performance. This was due to expanded bond operation losses caused by rising market interest rates, and reduced earnings in securities, derivatives, and foreign exchange sectors due to exchange rate increases and stock index declines.

General administrative expenses increased by only 1.6% compared to the same period last year, reaching 3.4459 trillion KRW, as a result of company-wide cost reduction efforts. The credit loss provision was 463.2 billion KRW, slightly increased by about 121 billion KRW due to additional provisions reflecting a conservative future economic outlook scenario. The loan loss provision ratio was 0.23%. The group's BIS capital adequacy ratio and common equity tier 1 ratio stood at 15.64% and 12.93%, respectively, exceeding regulatory requirements.

Meanwhile, on the same day, the KB Financial Group board of directors resolved a quarterly dividend of 500 KRW per share. Additionally, it decided to cancel treasury shares worth 150 billion KRW. This is the second time this year following February. The group's Chief Financial Officer emphasized, "We are canceling a total of 300 billion KRW worth of treasury shares this year," adding, "We are implementing a consistent and differentiated shareholder return policy despite the challenging management environment."

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