KB Financial to boost shareholder return after record 2022 net profit

[Courtesy of KB Financial Group]

South Korea’s KB Financial Group Inc. on Tuesday vowed to offer more returns to its shareholders on the back of record net profit in 2022 thanks to a rise in household loans and base rate hikes.

KB Financial said in a regulatory filing that it raised 4.41 trillion won ($3.5 billion) in net profit in 2022, up 0.1 percent from the previous all-time high of 4.4 trillion won in 2021.

“Net interest profit rose on growth in loans and net interest margin amid challenging business environment led by sluggish stock market and increased financial market volatility,” said an unnamed official from KB Financial.

Shares of KB Financial were trading 1.08 percent higher at 56,100 won on Wednesday morning.

KB Financial’s net interest profit reached 11.4 trillion won in 2022, up 18.9 percent from the previous year as interest profit from corporate loans at its flagship lender KB Kookmin Bank rose 1.6 trillion won. The net interest margin (NIM) for KB Financial and KB Kookmin Bank rose 0.13 percentage point and 0.15 percentage point each to 1.96 percent and 1.73 percent.

KB Financial’s net commission profit, in the meantime, fell 8.4 percent to 3.3 trillion won in 2022 due to a sharp decline in brokerage commissions. Sales of financial products remained weak.

KB Financial’s allowance for bad debts surged 249.4 percent from the previous quarter to 1.06 trillion won in the fourth quarter as it stacked up reserves in a preemptive move to manage assets amid high interest rate environment and economic uncertainty.

KB Financial plans to boost shareholder return based on the record earnings.

KB Financial said during a conference call that it will introduce a shareholder return policy based on a mid- to long-term equity management plan. It plans to manage the common equity tier 1 (CET1) ratio at 13 percent and return the excess amounts to shareholders. The financial group’s CET1 ratio was 13.25 percent last year.

KB Financial’s board also announced a shareholder return rate of 33 percent for 2022, up 7 percentage points from the previous year, which is the highest level among the four major financial holding companies in Korea.