KB Financial Decides to 'Reduce' Dividend Payout Ratio to 20%

Reduced from 26% to 20%
"Conservative capital management and support for the real economy required, leading to reduction"

[Asia Economy Reporter Park Sun-mi] KB Financial Group recorded a net profit of 3.4552 trillion KRW last year, an increase of 4.3%, while deciding to reduce the dividend payout ratio to 20%.

On the 4th, KB Financial Group announced in its earnings report that the dividend payout ratio for 2020 was set at 20%, with a dividend per share of 1,770 KRW. Considering that KB Financial's dividend payout ratio for 2019 was 26%, this represents a decrease of 6 percentage points.

The Chief Financial Officer of KB Financial explained this decision by stating, “Due to the prolonged economic recession caused by COVID-19 and the need to prepare for domestic and international macroeconomic uncertainties, conservative capital management and support for the real economy are required, resulting in a temporary reduction in the dividend level compared to the previous year.”

He added, “However, based on solid profit strength and the highest level of capital adequacy in the financial sector, we will always take the lead in implementing various shareholder return policies that meet global standards, such as expanding dividends and share buybacks.”

Earlier, financial authorities recommended that domestic banks reduce their dividend payout ratio (dividends/net profit) to within 20% until June this year as a measure to respond to COVID-19. This was intended to ensure capital management in the banking sector in preparation for the prolonged COVID-19 situation.

Meanwhile, KB Financial announced that its net profit last year reached 3.4552 trillion KRW, demonstrating a 4.3% increase compared to the previous year, thanks to steady growth in core profits despite difficult domestic and international business conditions and the fruits of inorganic growth through mergers and acquisitions (M&A). The group's net profit for the fourth quarter was 577.3 billion KRW, significantly down from 1.1666 trillion KRW in the previous quarter. This was affected by the base effect of recognizing severance costs (approximately 249 billion KRW after tax), additional COVID-19 related provisions (approximately 124 billion KRW after tax), and a bargain purchase gain from Prudential Life Insurance (about 145 billion KRW).