Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KB Financial Group Inc (KB, Financial) reported a cumulative net profit of KRW4,395.3 billion for Q3 2024, marking a 0.4% year-over-year increase.
- The company has maintained a strong capital buffer with a CET1 ratio of 13.85%, which is among the highest in the industry.
- KB Financial Group Inc (KB) has implemented a shareholder return policy linked to the CET1 ratio, enhancing predictability and sustainability of returns.
- The company has announced a quarterly cash dividend of KRW795 per share and an additional share buyback and cancellation of KRW100 billion.
- Despite macroeconomic uncertainties, KB Financial Group Inc (KB) has managed to improve its credit cost by 11 basis points year-over-year, maintaining robust control over credit costs.
Negative Points
- Net profit for Q3 2024 was KRW1,614 billion, showing a decline on a quarter-over-quarter basis.
- The company's net interest income decreased by 1.3% quarter-over-quarter due to interest rate cuts affecting loan asset yields.
- Group and Bank NIM decreased by 13 basis points quarter-over-quarter, reflecting market rate adjustments and lower loan yields.
- G&A expenses increased by 3.6% quarter-over-quarter, impacting overall cost efficiency.
- Non-operating profit declined by KRW140 billion quarter-over-quarter due to the base effect of last quarter's sizable provisioning for compensation costs.
Q & A Highlights
Q: Can you elaborate on the strategy behind the shareholder return policy and its linkage to the CET1 ratio?
A: Jong Hui Yang, Chairman and CEO, explained that KB Financial Group aims to enhance shareholder returns by linking them to the CET1 ratio. The strategy involves returning surplus capital to shareholders through dividends and share buybacks, depending on the CET1 ratio. For instance, if the CET1 ratio exceeds 13%, the excess will be used for dividends and buybacks, promoting sustainability and predictability in shareholder returns.
Q: What are the key drivers behind the Q3 2024 financial performance?
A: Jae Gwan Kim, CFO, highlighted that the group's cumulative net profit increased by 0.4% year-over-year, driven by strong performances from non-bank subsidiaries like securities, insurance, and credit card businesses. Despite challenges from rate cuts and a sluggish economy, these sectors contributed positively to the overall financial results.
Q: How is KB Financial Group managing credit costs amid macroeconomic uncertainties?
A: Jae Gwan Kim, CFO, stated that the group's credit cost improved by 11 basis points year-over-year to 0.41%. The company has built a substantial buffer through preemptive provisioning, allowing it to maintain robust control over credit costs despite ongoing macroeconomic uncertainties.
Q: What measures are being taken to address the decline in net interest margin (NIM)?
A: Jae Gwan Kim, CFO, noted that the decline in NIM was due to market rate adjustments and the lag in deposit repricing. However, the company expects stabilization as deposit repricing catches up with lending rates. KB Financial Group plans to focus on quality-driven growth with adequate margins to sustain interest income generation.
Q: How does KB Financial Group plan to enhance communication with investors, particularly individual investors?
A: Jae Gwan Kim, CFO, mentioned that the company is making efforts to strengthen communication with both institutional and individual investors. Initiatives include launching a value bulletin board on their website for investment-related information and planning to receive and answer questions from individual investors in future earnings releases.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
