[Click eStock] KB Financial Group Decides First Ever Interim Dividend Since Establishment

[Asia Economy Reporter Lee Seon-ae] Daishin Securities announced on the 23rd that it maintains a 'Buy' rating and a target price of 65,000 KRW for KB Financial Group.

KB Financial Group has decided on an interim dividend for the first time since its establishment, setting the dividend per share at 750 KRW. As of the end of June, it holds a high capital ratio with a CET1 ratio of 13.7%. Park Hye-jin, a researcher at Daishin Securities, stated, "KB Financial Group is keeping the possibility of share repurchase and cancellation open, and the annual profit for 2021 is expected to exceed 4 trillion KRW, which is likely to increase expectations for shareholder return policies." She added, "The 2021 DPS is expected to be 2,750 KRW, which corresponds to a dividend yield of 5.3% based on the previous day's closing price."

The net profit for the second quarter exceeded estimates of 1.11 trillion KRW and consensus of 1.14 trillion KRW by +8.9% and +5.3%, respectively. The bank's NIM remained steady at 1.56%, the same as the previous quarter, and won loans grew by +1.7%, resulting in net interest income of 2.76 trillion KRW (QoQ +4.4%, YoY +18.2%), maintaining solid growth. The bank's NIM was supported by a 4.4 trillion KRW increase in core deposits and a 3.5 trillion KRW decrease in time deposits, easing funding cost burdens. However, asset repricing due to two base rate cuts last year led to a decline in loan interest rates.

Non-interest income was 865 billion KRW (QoQ -10.5%, YoY +21.7%), slightly decreasing from the previous quarter due to a reduction in securities brokerage fees caused by lower trading volume and a contraction in trust sales.

Loan loss provisions amounted to 224 billion KRW (QoQ +29%, YoY -24.4%), exceeding expectations. The scale of special bond recoveries decreased, causing bank provisions to rise by +27.6% QoQ to 84.5 billion KRW, and card provisions also increased by +27.1% QoQ to 89.7 billion KRW. Consequently, the group's CCR rose by +5bp QoQ to 0.25%, but fell by -4bp YoY.