[Click eStock] "KB Geumyung, This Year's Consolidated Net Profit Downgraded... Target Price ↓"

[Asia Economy Reporter Hwang Yoon-joo] IBK Investment & Securities forecasted on the 22nd that KB Financial Group's net profit for this year is expected to decline. Accordingly, it maintained a 'Buy' investment rating but lowered the target price to 75,000 KRW.

Researcher Kim Eun-gap of IBK Investment & Securities stated, "We have lowered the consolidated net profit forecast for 2022 by 2.4%, resulting in a reduced target price."

Regarding the second-quarter performance this year, Researcher Kim evaluated it as "a solid performance considering the issue of additional reserve accumulation."

KB Financial Group's consolidated net profit for the second quarter was 1.3 trillion KRW, an increase compared to the same period last year. However, it was about 9% lower than the forecast and decreased by 10.3% compared to the record-high first quarter (1.45 trillion KRW).

The group's NIM for the second quarter was 1.96%, up 5 basis points (1bp=0.01%) points from the previous quarter, and the bank's NIM rose by 7bp. The increase in the group's NIM was smaller than that of the bank due to rising card funding costs.

Researcher Kim analyzed, "Excluding one-time factors, it decreased by 2.4% compared to the previous quarter," adding, "While the rise in net interest margin (NIM) sustained the growth in interest income, additional reserve accumulation and securities trading valuation losses occurred."

Looking in detail, the bank's total loans increased by 0.4% compared to the previous quarter. Corporate loans grew by 2.1%, whereas household loans decreased by 1.1%. Researcher Kim evaluated, "Although an additional reserve of 121 billion KRW was set aside in preparation for an economic slowdown, the loan loss cost ratio remains low at 0.23%. The bank's loan loss cost ratio is very low at 0.12%."

Researcher Kim expects performance improvement in the third quarter. He stated, "Interest income will increase, and loan loss costs will decrease," adding, "the NIM is also expected to rise in the third quarter."

He further diagnosed, "Even if reserve costs increase somewhat in the future, it is judged not to exceed manageable levels, and the improved profit capacity will be sufficient to offset it."

He also evaluated that shareholder-friendly policies are being strengthened. Researcher Kim analyzed, "With the decision to repurchase and cancel 150 billion KRW worth of treasury stock, a cumulative 300 billion KRW has been canceled this year, and the quarterly dividend for the second quarter was 500 KRW per share, the same level as the first quarter," adding, "This is a process in which strengthened shareholder-friendly policies are successfully settling in."

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