Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• KB Financial Group Inc (NYSE:KB) reported a net profit of over KRW5 trillion for 2024, marking a solid profit uptrend despite economic challenges.
• The company's pre-provisioning operating profit increased by 5.9% year over year, demonstrating strong earnings capacity.
• KB Financial Group Inc (NYSE:KB) implemented a share buyback and cancellation program, leading the market in shareholder returns.
• The group's ROE improved to 9.72% in 2024, reflecting successful business diversification efforts.
• Net fee and commission income rose by 4.8% year over year, driven by increased credit card merchant fees and cost efficiency gains.

Negative Points

• The rate cut cycle eroded profitability, raising concerns about asset quality due to a slump in the real economy.
• Q4 net profit saw a significant decline due to one-off expenses, including ERP costs and a decrease in gains from securities and derivatives.
• The group's CET1 ratio dipped slightly due to profit contraction in Q4 and FX fluctuations.
• Net interest margin (NIM) decreased slightly year over year, indicating challenges in maintaining profitability.
• Provisioning for credit losses increased by 13.5% quarter over quarter in Q4, reflecting a conservative stance amid potential economic downturns.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Sign with KB.

Q: Can you elaborate on the impact of the rate cut cycle on KB Financial Group's profitability and asset quality? A: Sang Rok Nah, CFO of KB Financial Group, explained that the rate cut cycle eroded profitability and raised concerns about asset quality due to a slump in the real economy. However, despite these challenges, KB Financial Group reported a net profit of over KRW5 trillion, demonstrating solid fundamentals supported by business portfolio diversification efforts.

Q: How did KB Financial Group's non-bank portfolio contribute to the group's top-line performance in 2024? A: The CFO highlighted that the non-bank portfolio significantly contributed to the group's top-line performance, with increased interest income from credit cards and insurance. The group's net fee and commission income rose by 4.8% year-over-year, driven by higher credit card merchant fees and cost efficiency gains.

Q: What measures is KB Financial Group taking to improve cost efficiency? A: The CFO stated that KB Financial Group plans to strengthen cost efficiency improvement efforts by minimizing fixed cost expenditures and refraining from large capital injections. The group aims to improve its cost structure and manage costs effectively, with a focus on core profit growth and HR structure improvements.

Q: Can you provide details on KB Financial Group's shareholder return policy and recent decisions? A: The CFO announced that KB Financial Group's Board of Directors decided on a total cash payout of KRW300 billion with a DPS of KRW804. The total yearly dividend payout amounted to KRW1.2 trillion, with KRW820 billion of share buyback and cancellation, resulting in a total shareholder return (TSR) of 39.8% for FY24. The board also resolved on KRW520 billion of share buyback and cancellation.

Q: How is KB Financial Group managing its capital adequacy and CET1 ratio? A: The CFO reported that the group's CET1 ratio as of December 2024 was 13.51%, maintaining a stable asset growth while being among the industry's top tier. Despite a slight dip due to profit contraction and FX fluctuations, the group is committed to managing RWA total amount limits and improving capital efficiency through asset rebalancing.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.