[Click eStock] "KB Financial Group: Rapid Expansion of Shareholder Returns"

Target Price Raised from 121,000 Won to 130,000 Won

On April 25, Korea Investment & Securities raised its target price for KB Financial Group from 121,000 won to 130,000 won, citing expectations of solid earnings growth and an expansion of shareholder return premiums this year. The investment opinion was maintained at 'Buy'.

KB Financial Group's controlling net profit for the first quarter was 1.6973 trillion won, exceeding market expectations by 7%. Although the credit loss ratio was higher than anticipated, non-interest income, general administrative expenses, and NIM (net interest margin) were generally favorable. The NIM, a profitability indicator for financial institutions, was 1.76%, up 4 basis points from the previous quarter. Baek Doosan, a researcher at Korea Investment & Securities, explained, "Despite the decline in market interest rates, the increase in core deposits and the repricing of high-interest term deposits were effective."

The credit loss ratio was 0.54%, up 16 basis points from the same period last year. Baek pointed out, "This was due to a deterioration in asset quality in the card segment and one-off provisioning in the corporate loan segment, including Homeplus." He added, "As income from the securities business and investment banking fees decreased, group commission income also declined by 6% from the previous quarter to 934 billion won."

KB Financial Group's swift shareholder return policy is expected to have a positive impact on its stock price. Baek noted, "The company made a surprise announcement of a 300 billion won share buyback and cancellation, which is a preemptive shareholder return policy in response to market volatility." He continued, "Taking into account the additional 391.5 billion won share buyback to be announced at the end of July, as well as an annual dividend that is 100 billion won higher than expected, we are raising the estimated 2025 shareholder return ratio from 44.4% to 45.6%."