KB Financial Group (A105560) H1 2024 earnings summary

Executive summary

• First half 2024 net profit was KRW 2,781.5 billion, down 7.5% year-over-year due to sizable ELS compensation costs in Q1, but non-bank subsidiaries showed modest earnings growth.

• Q2 net profit reached KRW 1,732.4 billion, with normalized net profit around KRW 1.6 trillion after adjusting for one-offs.

• Group maintained strong capital strength, with CET1 ratio at 13.59% as of June 2024 and continued industry-leading shareholder returns via cash dividends and share buybacks.

• Total assets at June 2024 reached ₩742.2 trillion, up 3.7% from year-end 2023, despite intensified loan competition.

• Cost efficiency remained stable, with CIR at 36.4% for H1 2024, supported by group-wide cost management.

Financial highlights

• Group net interest income for H1 was KRW 6,357.7 billion, up 9% year-over-year; net fee and commission income for H1 was KRW 1,909.8 billion, up 2.4% year-over-year.

• H1 2024 operating profit was ₩4,657.7 billion, up 11.1% year-over-year.

• Provision for credit losses fell 25.7% year-over-year to KRW 981 billion, with credit cost ratio at 0.40%.

• Q2 other operating profit was KRW 323.1 billion, up 19.5% quarter-over-quarter; H1 cumulative other operating profit was KRW 593.5 billion, lower year-over-year.

• H1 insurance income increased by KRW 185.7 billion year-over-year due to reserve reversals and improved loss ratios.

Outlook and guidance

• Expectation for continued stable earnings, with cost-to-income ratio trending downward and focus on enhancing core revenue sources.

• Bank's NIM expected to remain flat for 2024, with defensive strategies focused on expanding core deposits.

• Conservative provisioning stance to be maintained amid macro uncertainties and property project financing concerns.

• Quarterly dividend policy introduced in 2024, with a focus on stable and gradually increasing payouts.

• No decision yet on additional share buybacks for Q4; future actions will depend on circumstances.