[Click eStock] "KB Geumyung, Good Performance Even Excluding One-Time Gains"

Published 25 Apr.2022 07:15(KST)

Yuanta Securities Report

[Click eStock] "KB Geumyung, Good Performance Even Excluding One-Time Gains"

[Asia Economy Reporter Minji Lee] Yuanta Securities maintained a buy rating and a target price of 74,000 KRW for KB Financial Group.

KB Financial Group recorded a consolidated operating profit of 1.4531 trillion KRW in the first quarter, surpassing the market expectation of 1.2581 trillion KRW. This was due to the loan loss cost ratio falling to 15bps, influenced by a large special bond reversal of 59 billion KRW and a capital reserve reversal. Even excluding these factors, the operating profit before provisions was in line with estimates, showing solid performance. Other notable factors included a corporate tax reversal of approximately 69 billion KRW from the bank.

Interest income increased by 18.6% year-on-year on a retroactive basis and by 3.3% quarter-on-quarter. Despite a 0.8% quarter-on-quarter increase in KRW loans due to sluggish household loans, the group’s net interest margin (NIM) rose by 6bps and the bank’s NIM increased by 5bps.

Non-interest income decreased by 23.7% year-on-year on a retroactive basis. Other operating income dropped by 63.7% compared to the same period last year due to rising interest rates and a sluggish stock market, and fee income also declined by 5.4% during the same period.

Selling and administrative expenses decreased by 1.8% compared to the same period last year. Provision expenses fell by 25% year-on-year, significantly better than estimates. Researcher Taejun Jeong of Yuanta Securities stated, “This was due to a large special bond reversal of about 59 billion KRW and a capital reserve reversal of about 23 billion KRW, but even excluding these, the regular loan loss cost ratio was 23bps, maintaining excellent asset quality.”

A positive point is that the company regularized quarterly dividends, paying a dividend of 500 KRW per share in the first quarter and deciding to pay the same amount in the second and third quarters, thereby strengthening its shareholder return policy.