Yang Jong-hee, KB Financial Group Chairman, "In a Year of Internal and External Challenges, We Will Practice 'Stable Finance'"

New Year Relay Interview with Chairpersons of the Four Major Financial Holding Companies ①
Yang Jong-hee, Chairman of KB Financial Group

Although the new year of Eulsa has dawned, externally the inauguration of the second Trump administration and internally political instability, sluggish domestic demand, and low growth make it difficult to foresee the future. Yang Jong-hee, chairman of KB Financial Group, the nation's top financial company entering its third year in office, expressed his ambition by stating, "This year will be a year of internal and external challenges," and "In such circumstances, KB Financial will practice 'stable finance' that can alleviate anxiety."

On the 6th, Chairman Yang diagnosed the outlook for the Korean economy this year as "a period of internal and external challenges" in a written interview with Asia Economy. Externally, with the launch of the second Trump administration, pressure on not only China but also allied countries is expected to intensify, leading to a weakening of global trade and making Korea's exports more difficult. Internally, he forecasted that political instability will worsen consumer and investment sentiment, increasing concerns over sluggish domestic demand and low growth. Chairman Yang said, "There is hope that domestic demand will improve due to easing inflation and interest rate cuts, but due to political instability, economic growth is expected to decline from around 2.2% in 2024 to 1.8% in 2025, raising concerns about low growth."

He also viewed the exchange rate as a concern, forecasting a "high in the first half and low in the second half" pattern. Chairman Yang projected the exchange rate to be between 1,360 won and 1,470 won in the first half, and between 1,310 won and 1,350 won in the second half. He explained, "Currently, the won-dollar exchange rate remains excessively high, so in the first half, due to political instability and ongoing Trump policy risks, it is likely to maintain a high level around 1,400 won. However, as U.S. interest rate cuts proceed gradually, it is expected to fall to the low to mid-1,300 won range in the second half."

In this situation, Chairman Yang emphasized KB Financial's role in practicing 'stable finance.' He stated, "This year will be a year with higher internal and external uncertainties than ever before, and we will strive to show results in three areas: ▲ stable asset management ▲ fulfillment of value-up plans promised to investors ▲ and KB Financial's own soundness management."

He identified 'uncertainty' and 'polarization' as the key themes for the financial industry this year. Chairman Yang said, "With the possibility of China's economic downturn and intensifying geopolitical risks, combined with uncertain factors such as policy effects from the Trump administration, 'risk management' will remain a major topic in the financial sector." Additionally, he pointed out that social polarization is an important issue to be addressed.

As KB Financial's unique management strategies to overcome internal and external challenges, Chairman Yang cited 'efficient management' and 'innovative growth.' He said, "We plan to strengthen management considering capital and cost efficiency to secure sustainable profit capacity and enhance shareholder value. However, we will boldly invest in areas expected to grow in the future." Furthermore, given the unprecedented level of uncertainty, he plans to focus on risk management as well.

With the onset of a full-scale interest rate cut cycle this year, the decline in net interest margin (NIM), a representative profitability indicator for banks, is inevitable. Chairman Yang's plan is to focus on 'non-bank affiliates.' He said, "To defend performance, we will strengthen asset management (WM), capital markets, and investment banking (IB) sectors centered on non-bank affiliates such as securities and insurance. We also plan to improve management performance by reducing provisioning through proactive risk management in preparation for a possible economic downturn and cutting selling and administrative expenses to levels comparable to emergency management."

At the same time, this year, rather than pursuing aggressive mergers and acquisitions (M&A), KB Financial plans to reorganize its existing portfolio and focus on 'enhancing qualitative completeness.' However, from a value-up perspective, it will keep the possibility open for high-quality assets that can enhance shareholder value.

In particular, this year marks the inaugural year for implementing a shareholder return policy linked to the Common Equity Tier 1 (CET1) ratio for the value-up plan, aiming to present a sustainable and predictable shareholder return strategy. Chairman Yang described it as a plan to "catch three rabbits": improving profitability, enhancing shareholder value, and maintaining corporate soundness.

Finally, Chairman Yang emphasized that this year will be one of 'refreshing' in all areas of internal control. He said, "To create an environment where internal control can be ingrained in all frontline work, all affiliates are undergoing digital transformation of internal control," adding, "It will be a year to lay the foundation so that 'Trustworthy KB' and 'Clean KB' can be imprinted on customers and society."

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