KB Financial Group posts record first-half net profit of W3.88tr

KB Financial Group posted net profit of nearly 3.9 trillion won ($2.63 billion) in the first half of this year, a record for any half-year period. The result reflects steady profit growth across both its banking and non-banking units despite heightened market volatility from interest rate and exchange rate swings.

KB Financial Group said Thursday that its second-quarter net profit attributable to controlling interests came to 1.99 trillion won, up 14.6 percent from the same period last year, based on preliminary figures. The result marks the highest quarterly net profit in the group's history.

On a cumulative first-half basis, net profit reached 3.88 trillion won, up 13.1 percent from a year earlier.

Non-bank subsidiaries' contribution to group earnings rose to 44 percent in the first half. KB Financial Group said its securities unit drove much of that non-bank growth, with its contribution expanding to around 21 percent.

Return on equity as of end-June stood at 14.09 percent, up 1.06 percentage points from 13.03 percent a year earlier. Return on assets also improved, rising 0.05 percentage points to 0.95 percent from 0.90 percent over the same period. The cost-to-income ratio, a measure of operating efficiency, came in at 36.2 percent, holding steady below the 40 percent threshold.

The group's credit cost ratio, an indicator of asset quality, improved 0.15 percentage points year-on-year to 0.39 percent. KB Financial Group attributed the result to loss-absorption buffers built up preemptively last year against macroeconomic volatility and the group's continued conservative approach to risk management.

The common equity tier 1 ratio rose to 13.74 percent from 13.64 percent in the previous quarter. The Bank for International Settlements capital adequacy ratio, however, fell 0.49 percentage points to 15.91 percent from 16.40 percent.

KB Financial Group's net interest income in the first half came to 6.48 trillion won, up 1.7 percent from a year earlier. Although interest income fell 1.5 percent, the group cut interest expenses by 4.0 percent through funding cost reductions and other profitability management efforts. The net interest margin for the period fell 0.05 percentage points quarter-on-quarter to 1.94 percent.

Non-interest income over the same period rose 33.3 percent year-on-year to 3.63 trillion won, with net fee income surging 50.6 percent to lead the gains. Buoyed by a strong stock market, brokerage commission income from the securities business surpassed 1 trillion won — roughly three times the first-half figure a year earlier — while trust income more than doubled to 558.4 billion won. Card earnings also showed signs of recovery.

Looking at the second quarter alone, the rise in net fee income stands out. Net fee income for April through June reached 1.6 trillion won, up 17.8 percent quarter-on-quarter — a quarterly record.

KB Financial Group said stable management of the bank's interest income base, combined with sharp growth in capital markets-related net fee income from its banking, securities and asset management units, drove the group's overall earnings.

KB Financial Group's total assets as of end-June stood at 866.9 trillion won, while total group assets including assets under management came to 1,719 trillion won. Over the same period, the non-performing loan (NPL) ratio was 0.67 percent and the NPL coverage ratio stood at 135.4 percent.

By subsidiary, KB Kookmin Bank posted first-half net profit of 2.23 trillion won, up 1.7 percent from a year earlier. KB Securities recorded net profit of 796.3 billion won, a 135.0 percent increase year-on-year, while KB Kookmin Card's net profit rose 20.7 percent from a year ago to 218.9 billion won.

KB Insurance and KB Life Insurance, however, saw their earnings decline from a year earlier, posting net profit of 478.8 billion won and 150.6 billion won, respectively.

KB Financial Group also announced Thursday a quarterly cash dividend of 1,155 won per share and a plan to buy back and cancel 700 billion won worth of its own shares in the second half.

The share buyback and cancellation follows KB Financial Group's shareholder return framework, under which capital exceeding a CET1 ratio of 13.5 percent as of end of the first half is allocated as a second-round source of shareholder returns. Total shareholder returns for this year are expected to reach around 3.7 trillion won as a result.

Na Sang-rok, KB Financial Group's executive director for finance, said: "The remaining surplus capital after the 700 billion won share buyback and cancellation will be used as an additional source of shareholder returns in the second half, taking into comprehensive consideration factors such as this year's earnings level, price-to-book ratio and dividend yield trends."