South Korea’s largest financial holding group KB Financial Group Inc. has logged its record quarterly profit in the April-June period, thanks to the bank’s increased interest margin and the enhanced profitability of non-banking affiliates such as its brokerage and insurance units.
On Tuesday, KB Financial posted a 1.73 trillion won ($1.2 billion) net profit for the second quarter, its record-high quarterly profit and a 15.6% jump from the year-earlier period.
The group’s interest margin in the second quarter increased 1.7% to 3.21 trillion won from the previous quarter. The interest margin made up 72.1% of the group’s second-quarter operating profit.
The rise in the quarterly interest margin was driven by flagship unit Kookmin Bank’s household and corporate loans, which respectively rose 2.6% and 2% from the first quarter.
However, the group and Kookmin Bank saw their net interest margin, a key indicator for profitability, fall 0.03 percentage point to 2.08% and 1.84%, respectively, in the aftermath of lowered market interest rates.
"Excluding one-time gains, the second-quarter net profit reached 1.6 trillion won,” said KB Financial Chief Financial Officer Kim Jae-kwan.
(Graphics by Dongbeom Yun)
For the first half of this year, KB Financial earned 2.78 trillion won in net profit, 7.5% down from a year-earlier period when it achieved its largest half-yearly net profit.
The group’s provisions for loan losses declined 25.7% on-year to 981 billion won for the January-June period. Its Bank for International Settlements (BIS) capital adequacy ratio and common equity tier1 (CET1) ratio for the first half were 16.63% and 13.59%, respectively, remaining among the highest in the banking industry.
Kookmin Bank’s second-quarter net profit reached 1.12 trillion won, soaring 186.6% from the first quarter when the bank was hit hard by the ELS product losses.
The bank said its interest margin contributed to the second-quarter net profit. The margin rose 1.1% to 2.58 trillion won as Korean-currency loans increased, the bank added.
For the first half, the bank’s net profit dropped 19% on-year to 1.51 trillion won.
KB Financial’s non-banking units improved their earnings in the first half, making up 38.7% of the group’s net profit.
Brokerage arm KB Securities Co. posted 376.1 billion won in the first half, its best half-yearly net profit since it was acquired by KB Financial in 2016.
Non-life insurer KB Insurance Co. logged 572 billion won in first-half net profit, up 7.8% from a year-earlier period, thanks to improved loss ratios. Credit card unit KB Kookmin Card Co. posted 255.7 billion won in first-half net profit, a 32.6% jump from the year-earlier period on cost efficiency.
KB Financial said it will distribute a quarterly dividend of 791 won per share and buy back and retire 400 billion won worth of treasury shares. It will be the second repurchase and retirement of the company shares, following the cancelation of 320 billion won worth of shares in February of this year.
Write to Bo-Hyung Kim at kph21c@hankyung.com Jihyun Kim edited this article.
