[Click eStock] KB Financial, Shareholder Return Policy Exceeds Expectations... Target Price Raised

Korea Investment & Securities positively evaluated KB Financial Group's shareholder return policy and raised the target stock price from the previous 110,000 KRW to 121,000 KRW. The investment rating was maintained at 'Buy.'

Baek Doosan, a researcher at Korea Investment & Securities, stated in a report released on the 25th, "We applied a target price-to-book ratio (PBR) of 0.86 to the third-quarter book value per share (BPS). The return on equity (ROE) and cost of capital embedded in the target PBR are 9.8% and 11.1%, respectively," adding, "The shareholder return policy was announced beyond expectations for both short-term and mid-to-long-term perspectives."

The first announcement timing is in February. If the common equity tier 1 ratio for the previous year's fourth quarter exceeds 13.0%, KB Financial plans to use the excess capital corresponding to the excess ratio as the annual dividend total for the current year and as funds for share repurchases or cancellations in the first half of the year. Researcher Baek explained, "For example, if the expected capital ratio for the fourth quarter of this year is 13.57%, the excess ratio of 0.57% corresponds to 1.96 trillion KRW, which is divided into 1.28 trillion KRW for next year's annual dividend total and 680 billion KRW for share repurchases and cancellations in the first half of next year."

KB Financial's third-quarter net income attributable to controlling interests was 1.6139 trillion KRW, exceeding Korea Investment & Securities' estimate by 14% and the consensus by 7%. Researcher Baek said, "Although the net interest margin (NIM) was sluggish compared to estimates, non-interest income and the loan loss ratio were favorable," adding, "The bank's NIM was 1.71%, down 13 basis points (1bp = 0.01 percentage points) from the previous quarter."

He continued, "The market interest rate declined in a way that inverted the short- and long-term interest rate spread, and loan assets' yield decreased as loans increased mainly in mortgage loans," and added, "Considering the resolution of the above factors and the full-scale repricing of deposits, the fourth-quarter NIM is expected to decline by only 2 basis points compared to the previous quarter."

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