KB Financial Group on track to achieve $3.7 bn in annual net profit

[Courtesy of KB Financial Group]

South Korea’s KB Financial Group Inc. posted 1.3 trillion won ($964 million) in net profit for the third quarter thanks to robust performance of its lending business, solidifying its leading position in the banking segment.

KB Financial disclosed Tuesday that its net profit reached 1.37 trillion won during the July-September period, up 0.4 percent from the same period a year ago.

For the first 9 months of this year, KB Financial’s net profit stood at 4.37 trillion won, up 8.2 percent from the same period last year. The group is well on course to achieve more than 5 trillion won in net profit for the full year.

KB Financial’s stellar performance is attributed to its bank subsidiary KB Kookmin Bank Co.

KB Kookmin Bank was the only one among the affiliates to achieve on-year growth in the third quarter.

The bank’s net profit came to 996.9 billion won in the July-September period, up 21 percent from the same period last year.

KB Financial and KB Kookmin Bank reported their net interest margins (NIM) at 2.09 percent and 1.84 percent, respectively, during the third quarter, a level consistent with the second quarter of the year.

Other financial conglomerates are projected to see a notable decline in their third-quarter NIM, which measures profit after deducting interest expenses from interest income.

KB Kookmin Bank attributed the achievement to its slower NIM adjustments in response to interest rate hikes, as its deposits had relatively longer-term durations compared to other lenders, which allowed it more time for the impact of interest rate increases to fully affect its NIM.

Moreover, KB Financial’s strategy of augmenting demand deposits, a low-cost product, to reduce procurement costs has contributed to increased profits.