KB Financial Group Reports 3Q Net Profit of 1.1666 Trillion KRW, Up 18.8% QoQ (Update)

KB Financial Group Announces 2020 Q3 Business Performance

[Asia Economy Reporter Park Sun-mi] On the 22nd, KB Financial Group announced its third-quarter management performance, reporting a third-quarter net profit of 1.1666 trillion KRW, an 18.8% increase compared to the previous quarter.

Net interest income and net fee income steadily increased, influenced by the base effect from the proactive additional loan loss provisions made in the second quarter (approximately 149 billion KRW after tax) and the gain on bargain purchase related to the acquisition of Prudential Life (145 billion KRW).

Excluding major one-time factors, recurring net profit also remained in the high 900 billion KRW range, maintaining a stable performance trend despite recession concerns, supported by increases in core earnings such as interest income and fee income, as well as conservative soundness management.

The cumulative net profit for the third quarter was 2.8779 trillion KRW, up 3.6% year-on-year. This is interpreted as the result of increased net interest income based on solid loan growth and efforts to expand net fee income, even amid a net interest margin (NIM) contraction cycle following a 75bp base rate cut this year.

Regarding the management performance of major affiliates, KB Kookmin Bank's third-quarter net profit was 635.6 billion KRW, down 3.8% from the previous quarter. The cumulative net profit also decreased by 6.2% year-on-year to 1.8824 trillion KRW. Despite solid interest income growth based on loan growth and the acquisition of Prasac, a microfinance institution in Cambodia, the bank was affected by additional loan loss provisions (approximately 115 billion KRW after tax) set aside in the second quarter reflecting a conservative future economic outlook.

KB Securities' third-quarter net profit was 209.7 billion KRW, a 39.6% increase from the previous quarter. The cumulative net profit for the third quarter was 338.5 billion KRW, up 50.6% year-on-year. This was influenced by a significant increase in securities business fee income, including an approximately 244 billion KRW increase in custody fees due to efforts to expand customer assets under custody, and an approximately 29 billion KRW increase in investment banking (IB) fees through active expansion and support of the IB business.

KB Insurance's third-quarter net profit was 42.6 billion KRW, down 36.2% from the previous quarter, and the cumulative net profit was 186.6 billion KRW, a 20.2% decrease year-on-year. This was mainly due to poor insurance profits caused by rising loss ratios in automobile and long-term insurance.

KB Kookmin Card recorded a third-quarter net profit of 91.4 billion KRW in 2020. The elimination of special factors such as additional loan loss provisions (approximately 23 billion KRW after tax) in the second quarter and improved asset soundness, including a decline in delinquency rates on high-risk assets such as card loans, led to a decrease in credit loss provisions, resulting in an 11.9% increase compared to the previous quarter.