KB Financial, First in Industry to Join '5 Trillion Club' with Record High Net Profit... Interest Income Alone 13 Trillion

Net Profit Up 10.5% Year-on-Year
Interest Income Reaches 13 Trillion KRW on Wider Loan-Deposit Margin
1.76 Trillion KRW Allocated for Dividends and Share Buybacks

KB Financial Group recorded an annual net profit of 5.0782 trillion KRW in 2024, becoming the first in the industry to join the '5 trillion club.' This represents a 10.5% increase compared to the previous year and is the largest scale ever. In particular, interest income based on the interest rate spread between loans and deposits reached 13 trillion KRW. Accordingly, KB Financial Group plans to use 1.76 trillion KRW this year as funds for annual cash dividends and share buybacks and cancellations.

On the 5th, KB Financial Group announced its 2024 business performance, reporting an annual net profit of 5.0782 trillion KRW for 2024, a 10.5% increase from 4.5948 trillion KRW in the previous year.

It also revealed that the net profit for the fourth quarter of last year was 682.9 billion KRW, more than three times the 218.3 billion KRW recorded in the same period the previous year.

However, compared to the record-high quarterly net profit of 1.7324 trillion KRW in the second quarter of last year or the 1.614 trillion KRW in the third quarter, it decreased significantly. This was due to the recognition of voluntary retirement costs and a reduction in insurance performance caused by seasonal factors.

Specifically, net interest income (1.28267 trillion KRW) increased by 5.3% during the same period. However, due to the decline in market interest rates, the annual net interest margin (NIM) fell by 0.05 percentage points over the year to 2.03% for the group and 1.78% for the bank.

Net fee income (384.96 billion KRW) also rose by 4.8%. Although trust fees from banks and real estate trusts decreased due to the suspension of sales of equity-linked securities (ELS) and a slump in the real estate project financing (PF) market, credit card fee income increased by about 100 billion KRW, and securities business fee income in the investment banking (IB) sector also grew.

A KB Financial Group official said, "Despite a challenging business environment, including large-scale ELS customer compensation and declining market interest rates, the expansion of profits in non-bank sectors such as securities, cards, and insurance has proven the group's enhanced profit-generating capabilities."

By affiliate, KB Kookmin Bank's net profit was 3.2518 trillion KRW, a 0.3% decrease from a year earlier. However, considering the large one-time cost related to compensation for losses from the Hong Kong H-Share Index (Hang Seng China Enterprises Index) ELS, the actual figure increased significantly.

Net profits for KB Securities, KB Insurance, KB Card, and Life Insurance were 585.7 billion KRW, 839.5 billion KRW, 402.7 billion KRW, and 269.4 billion KRW, respectively, marking increases of 50.3%, 17.7%, 14.7%, and 15.1%.

As of the fourth quarter of last year, the NIM for KB Financial Group and KB Kookmin Bank (1.98% and 1.72%) rose by 0.03 and 0.01 percentage points, respectively, compared to the third quarter (1.95% and 1.71%). This is interpreted as an effect of the expanded interest rate spread under the pretext of managing household loan demand.

Given the record-high profits, KB Financial Group plans to make generous returns to shareholders. As stated in last year's corporate value enhancement plan, KB Financial announced that it will use 1.76 trillion KRW of capital exceeding 13% of the CET1 ratio of 13.51% at the end of 2024 as funds for annual cash dividends and share buybacks and cancellations this year. To this end, the board of directors resolved to repurchase and cancel shares worth a total of 520 billion KRW, considering the total annual cash dividends. In the second half of the year, capital exceeding a CET1 ratio of 13.50% will also be used as additional shareholder return funds.

KB Financial Group stated, "The continuous expansion of profit contributions from the non-bank portfolio led to an improvement in the group's solid profit-generating capacity," adding, "Going forward, KB Financial will strengthen efforts to enhance competitiveness in each business sector to respond to the low-growth and declining interest rate environment and will continue qualitative growth efforts centered on risk-weighted asset return (RoRWA)."

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