KB Financial Group announced on the 7th that its net income attributable to controlling shareholders for 2023 was 4.6319 trillion KRW, an 11.5% increase compared to the previous year. This level of net income is the highest ever recorded.
However, net income for the fourth quarter was 261.5 billion KRW, a significant decrease from the previous quarter. This was mainly due to one-time expenses such as provisions for loan losses reflecting conservative loss rates on real estate project financing (PF), the largest support amount among participating banks for the group’s voluntary retirement and banking sector livelihood financial support, as well as seasonal factors.
Annual net interest income increased by 5.4% year-on-year to 12.1417 trillion KRW. This was driven by stable revenue bases secured through a 4.0% growth in bank won-denominated loans centered on corporate loans compared to the end of the previous year, an improvement in net interest margin (NIM) reflecting the repricing effect of loan assets due to last year’s interest rate hikes, and steady expansion of interest income contributions from non-bank affiliates such as securities and credit card companies.
The annual NIM for the group and the bank improved by 12 basis points and 10 basis points respectively, reaching 2.08% and 1.83%, which led to an increase in interest income.
Net fee income rose 4.5% year-on-year to 3.0735 trillion KRW. Although card usage amounts remained at the previous year’s level due to subdued consumer sentiment amid low growth and high inflation, securities custody fees increased due to a rise in stock contract amounts. Additionally, efforts to improve the portfolio, such as reducing high-cost sales (national taxes, local taxes, four major social insurances, etc.), expanded merchant fee income, and an increase in lease fees due to higher operating interest rates at the capital company contributed to the growth.
The loan loss provision ratio increased to 0.67%. The credit loss provision amount for the fourth quarter was 1.3782 trillion KRW, up 929.6 billion KRW from the previous quarter.
The group’s non-performing loan (NPL) ratio stood at 0.57%, and the NPL coverage ratio was about 174.5%. Although the NPL coverage ratio declined compared to the previous year due to more conservative classification of asset soundness in key management sectors such as real estate PF and overseas commercial real estate, the company explained that it still maintains industry-leading loss absorption capacity.
KB Insurance and KB Life posted net incomes of 752.9 billion KRW and 256.2 billion KRW respectively, increasing by 35.1% and 88.7% year-on-year. On the other hand, KB Kookmin Card’s net income remained at 351.1 billion KRW, down 7.3% year-on-year, due to increased provisions from deteriorating asset quality caused by rising funding costs from market interest rate hikes and increased delinquency rates.
A KB Financial Group official explained, “As a result of all parts of the group’s top line continuing to generate strong and balanced earnings, total operating profit for 2023 recorded about 16 trillion KRW, achieving an all-time high annual growth rate of 17.8%.”
Meanwhile, KB Financial decided through a board resolution to increase the dividend per share for this year by about 4% compared to the previous year, to 3,060 KRW. In addition, to enhance shareholder value, it also decided to repurchase and cancel treasury shares worth approximately 320 billion KRW. KB Financial stated, “In accordance with the ‘Mid-to-Long-Term Capital Management Plan’ announced last February, we plan to faithfully implement shareholder return policies. We understand that there is growing market interest in enhancing corporate value for low PBR stocks, and we will actively respond once the detailed value-up program is finalized to ensure substantial corporate value enhancement.”
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