KB reclaims top financial group, bank titles in first half

KB Financial Group headquarters in Seoul (KB Financial Group)

KB Financial Group reclaimed its position as the top financial group in Korea with a net profit of 2.99 trillion won ($2.34 billion) in the first half, surpassing other players. The group's flagship KB Kookmin Bank also regained the leading bank title with a net profit of 1.85 trillion won in the same period.

Although KB set aside more than 1.31 trillion won for bad debt reserves in the first half of 2023, the expansion of net interest income and robust profits from nonbanking businesses drove its performance, the group explained.

“Despite the challenging business environment, characterized by the economic slowdown and financial market uncertainties, the group's robust fundamentals and profit drive were once again demonstrated,” KB Financial Group Chief Financial Officer Seo Young-ho said during its earnings conference call Tuesday.

KB’s net interest income for the first half stood at 5.75 trillion won, up 5.2 percent on-year. This was mainly due to the expansion of net interest margin and the recovery in loan growth during the second quarter, according to KB.

Also, in the first half, noninterest income amounted to 2.89 trillion won, representing a 105.5 percent on-year surge. This growth was mainly due to the increased amount the firm earned in brokerage fees as stock market trading volume rose in the second quarter. Increased fees earned from arranging large-scale mergers and acquisitions also contributed to the high noninterest income.

Following KB is crosstown rival Shinhan Financial Group, which posted a 2.1 percent on-year drop in net profit, totaling 2.62 billion won.

“Despite an increase in operating profit, the net profit decreased because of bad debt reserves that have been conservatively set aside,” Shinhan CFO Lee Tae-kyung stressed in its earnings conference Thursday.

Shinhan’s bad debt reserves reached 1 trillion won in the first half, showing a significant increase of 67.8 percent from the same period last year.

Ever since 2017 when KB's net profit surpassed Shinhan for the first time, the two top-tier banking groups have been vying for the top position.

Shinhan reclaimed the top position in 2018, but in 2020 KB regained Korea’s leading financial group title.

Last year, Shinhan was the top financial group with a net profit of 4.64 trillion won, surpassing KB's net profit by more than 200 billion won.

Meanwhile, Woori Financial Group announced Thursday that it realized a net profit of 1.53 trillion won during the first half and Hana Financial Group’s net profit during the same period recorded 2.2 trillion won.

KB’s flagship KB Kookmin Bank is also the top bank with a net profit of 1.85 trillion won, surpassing three rivals — Hana, Shinhan, and Woori. The lender’s record-high net profit represents a 7.7 percent increase compared to the previous year.

Shinhan Bank's net profit amounted to 1.68 trillion while Hana Bank and Woori Bank recorded 1.83 trillion won and 1.47 trillion won, respectively.

This is also meaningful for KB Kookmin Bank, as it conceded its top position in terms of net profit to Hana Bank last year.

In the first quarter of this year, KB Kookmin Bank with a net profit of 931.5 billion won continued to fall behind Hana Bank with a net profit of 970.7 billion won.

By Song Seung-hyun(ssh@heraldcorp.com)