[Asking the Four Major Financial Groups About Their New Strategies] Yang Jonghee, Chairman of KB Financial Group: "Paradigm Shift... Focusing on M&A to Enhance Corporate Value"

New Year's Interview
Productive Finance and AI Transformation Will Determine Financial Firms' Competitiveness
Emphasis on Paradigm Shift
This Year Marks the Beginning of a Major Transformation in the Financial Industry
"Expanding Business Boun

Yang Jonghee, Chairman of KB Financial Group. Provided by KB Financial Group

Yang Jonghee, Chairman of KB Financial Group, stated on January 5, "The biggest theme this year is a paradigm shift," adding, "We will expand the boundaries of our business to include customers and markets that we have not been able to focus on until now."

In a written New Year's interview with The Asia Business Daily, Chairman Yang emphasized, "A transition to productive finance and a major shift centered on artificial intelligence (AI) are occurring simultaneously. How we respond to these changes will determine the competitiveness of financial companies."

He added, "We will broaden our market dominance among strategic customer groups such as seniors and small businesses, secure leadership in the digital asset market, and expand our global business areas. Through these efforts, we plan to establish a foundation for sustainable growth."

Chairman Yang also announced plans to strengthen the group's non-interest income segment. Regarding merger and acquisition (M&A) plans to this end, he explained, "We will focus on M&As that help enhance corporate value."

"This Year Marks the Starting Point for a 'Structural Transformation' in the Financial Industry"

Chairman Yang predicted that this year, mega-trends such as demographic shifts, responses to the climate crisis, and accelerated technological innovation will have a full-scale impact across the financial industry. In particular, he cited the "productive finance" initiative being promoted by the Lee Jaemyung administration as a key variable. He said, "As the 150 trillion won National Growth Fund is fully deployed, the efficient resource allocation function of financial institutions-selecting strong companies and supplying appropriate funding-will be crucial."

He expected that household loan growth would slow this year due to continued regulations on household lending. However, he anticipated that demand for asset management among the baby boomer generation and Millennials & Gen Z would increase. Chairman Yang stated, "Rather than focusing on short-term margin defense, we will concentrate on improving the quality of our business portfolio to reduce sensitivity to changes in the interest rate environment."

"Continued Pressure from Slowing Growth... Preparing for External Variables Such as Exchange Rate Increases"

Chairman Yang forecasted that, in the global economy this year, "The United States will see a slight improvement in growth, while the Eurozone, Japan, and emerging markets will continue to experience slowing growth." He particularly noted that, except for the United States, major economies will continue to face downward growth pressure due to factors such as U.S. tariff and trade policies and the global trend toward protectionism.

He said, "For the Korean economy this year, risk management and improving economic fundamentals are critical. The growth structure remains heavily dependent on semiconductors and exports, and the slow recovery of domestic demand is likely to lead to further polarization by industry and income level." He added, "It will not be easy to achieve a marked improvement in the quality of growth in the short term."

Regarding the recent high exchange rate situation, he explained that the group is actively preparing for changes in capital ratios. Chairman Yang said, "We are taking various measures, such as managing foreign exchange position exposures," and added, "By evaluating and rebalancing portfolios for each affiliate, we are maintaining stable profit generation even within the limited growth rate of risk-weighted assets."

KB Financial Group regularly consults and monitors with its affiliates to ensure the stable management of its Common Equity Tier 1 (CET1) capital ratio. As of the third quarter, the CET1 ratio stood at 13.83%, an increase of 6 basis points (1bp = 0.01 percentage point) from the previous quarter, marking the largest improvement among major financial holding companies.

"Expanding Non-Interest Income... Focusing on M&As to Enhance Corporate Value"

Chairman Yang also presented a blueprint to gradually increase the proportion of the group's non-interest income in the future. With the expansion of the customer base and growth in assets under management (AUM) as key pillars, the group aims to strengthen non-interest income sectors such as wealth management (WM), corporate finance (IB), capital markets, and insurance to secure stable sources of profit.

He also left open the possibility of M&As in this context. Chairman Yang emphasized, "Whereas past M&As aimed to complete the portfolio, going forward, we will focus on M&As that genuinely contribute to enhancing corporate value."

He continued, "We will continuously explore opportunities for high-quality assets that align with the group's mid- to long-term strategy and capital utilization direction, and that can enhance shareholder value."

Regarding global strategy, the group will focus on building a long-term foundation for growth. Rather than unconditional expansion, the plan is to establish a sustainable growth model through selective and phased investments in promising markets. Chairman Yang stated, "This year will be a pivotal year as our global business moves beyond the stabilization phase to a new stage of growth. We will actively seek out opportunities to source a diverse range of global products."