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01/11 21:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial performance, with increased net profit, gross operating profit, and EPS. Despite high credit loss provisions, the company maintains solid earnings fundamentals and capital adequacy. Shareholder returns are positive, with increased dividends and share buybacks. The Q&A section does not highlight significant management concerns, and the strategic plan indicates proactive management of risks and asset quality. Overall, the company's performance and shareholder commitment suggest a positive stock price movement in the short term.
Net Profit Attributable to Controlling Interest KRW4,631.9 billion, up 11.5% Y-o-Y. This increase was driven by non-interest income, solid earnings improvements, and stable cost control despite macroeconomic headwinds.
Gross Operating Profit KRW16 trillion, up 17.8% Y-o-Y. This was achieved through balanced and strong earnings fundamentals across all top-line segments.
G&A Expenses KRW6,647.4 billion, a mere 0.1% increase Y-o-Y. This was due to personnel restructuring, strict cost control, and other measures to enhance cost efficiencies.
Provisions for Credit Losses KRW3,146.4 billion, significantly up Y-o-Y. This increase was due to high interest rates and expanded credit risk in the real estate market, including pre-emptive provisioning for priority watch list sectors.
Net Interest Profit KRW12,141.7 billion, up 5.4% Y-o-Y. This was due to improving net interest margins and a 4% YTD increase in Korean won loans.
Net Fee Income and Commission KRW3,673.5 billion, up 4.5% Y-o-Y. This growth was driven by solid business fees from the retail customer base in credit card, securities, and capital businesses.
Other Operating Profit KRW413.9 billion, a significant improvement from the previous year's large losses, up by KRW1,663.5 billion. This was due to improving market conditions and diversified funding asset portfolios.
Credit Cost Ratio 67 bps in 2023, but excluding one-off factors, it stands at approximately 40 bps, maintained at a stable level.
NPL Coverage Ratio 174.5% as of the end of 2023. Despite a slight fall Q-o-Q, it remains at the industry's highest level of loss-absorbing capacity.
Bank Loans in Won KRW342 trillion, a 4% YTD increase. Corporate loans grew by 7.7% YTD, while household loans posted a 0.3% growth YTD.
Net Interest Margin (NIM) Group NIM at 2.08% and Bank NIM at 1.83%, a 12 bps and 10 bps increase Y-o-Y, respectively. This was due to reduced funding costs and improved profitability of financial investments.
BIS Ratio 16.71% as of the end of 2023, up 55 bps Y-o-Y. This reflects robust capital adequacy despite increased RWA and dividend effects.
CET1 Ratio 13.58% as of the end of 2023, a 34 bps improvement YTD. This was driven by solid net profit growth and OCI movement.
Earnings Per Share (EPS) KRW11,581, up approximately 12.1% Y-o-Y. This increase was due to sound income growth and share buyback and cancellation effects.
Book Value Per Share (BPS) KRW148,241, up 9.3% Y-o-Y. This was due to consistent efforts to enhance shareholder value, including active share buyback and cancellation.
Net Profit Growth: KB Financial Group's net profit attributable to controlling interest for 2023 posted KRW4,631.9 billion, up 11.5% Y-o-Y, driven by non-interest income and stable cost control.
Gross Operating Profit: Record high gross operating profit for 2023, posting KRW16 trillion, up 17.8% Y-o-Y.
Cost Efficiency: G&A expenses increased only 0.1% Y-o-Y, with the group CIR at record low levels of approximately 41%.
Credit Loss Provisions: Provisions for credit losses posted KRW3,146.4 billion, up significantly Y-o-Y, with additional provisions set aside for real estate PF and overseas commercial real estate.
Loan Growth: Bank loans in won grew 4% YTD, with corporate loans leading the growth at 7.7% YTD.
Net Interest Margin (NIM): Group NIM posted 2.08%, up 12 bps Y-o-Y, driven by improved loan asset repricing and reduced funding costs.
Shareholder Returns: Per share dividend for 2023 increased to KRW3,068, up 4% Y-o-Y, with a share buyback and cancellation of KRW320 billion.
Capital Management Plan: CET1 ratio improved to 13.58%, with excess capital beyond 13% planned for shareholder returns.
ESG Initiatives: KRW7.14 trillion provided in social finance and KRW300 billion contributed to social programs, including support for underprivileged groups and small businesses.
Credit Risk in Real Estate Market: Due to high interest rates, credit risk in the real estate market has expanded substantially. Concerns are high about deteriorating asset quality in the real estate PF market, especially after Taeyoung E&C filed for a debt-restructuring program. Provisions for credit losses increased significantly, with KRW754 billion set aside for priority watch list sectors, including real estate PF and overseas commercial real estate.
Overseas Commercial Real Estate Exposure: The group has approximately KRW1 trillion in exposure to overseas commercial real estate, primarily in the US and Europe. While the portfolio is mostly senior debt, there are concerns about potential risks in this sector. Conservative provisioning has been made, but the exposure remains a potential risk.
High Credit Loss Provisions: Credit loss provisions increased significantly in Q4 2023, driven by pre-emptive provisioning for priority watch list sectors. This reflects a conservative outlook on asset quality and potential future risks, particularly in real estate and overseas commercial real estate.
Economic Uncertainties and Interest Rate Impact: High interest rates have impacted credit risk and asset quality, particularly in the real estate sector. Additionally, the diminishing loan asset repricing effect due to interest rate hikes may affect net interest margins (NIM) in 2024.
Regulatory and Compliance Risks: The company is under audit by the FSS regarding ELS-related issues, which could impact customer trust and lead to potential regulatory penalties or reputational damage.
Credit Cost and Provisions: The company has set aside significant provisions for credit losses, particularly in the real estate PF and overseas commercial real estate sectors, to prepare for potential risks. It does not foresee additional provisioning in 2024 unless exceptional events occur in the real estate market.
Shareholder Returns: The company plans to maintain a strong shareholder return policy, including quarterly dividends and share buybacks. It aims to utilize excess capital (beyond a CET1 ratio of 13%) for shareholder returns, barring exceptional financial volatility.
Net Interest Margin (NIM): The company expects NIM to slightly decrease in 2024 compared to 2023 due to maturing high-interest rate time deposits and other factors. However, it plans to manage its funding portfolio flexibly to mitigate impacts.
Loan Growth: Loan growth in 2024 is expected to focus on corporate loans and be maintained at the nominal GDP growth level.
Overseas Real Estate Exposure: The company holds approximately KRW1 trillion in overseas commercial real estate exposure, primarily in senior debt. It has conservatively provisioned for these assets and does not anticipate significant future impacts.
Per Share Dividend for 2023: KRW3068, up 4% from KRW2950 of the previous year.
Dividend Growth: Dividends have been gradually increasing, reflecting the company's commitment to shareholder returns.
Quarterly Dividends: The company plans to continue quarterly dividends in 2024, with details to be discussed with the Board of Directors.
Share Buyback and Cancellation for 2023: KRW320 billion, in addition to KRW300 billion undertaken in July 2023.
Total Shareholder Return (TSR) Ratio: Approximately 38.6% for 2023, including share buybacks and dividends.
Future Shareholder Return Policy: The company plans to actively utilize capital exceeding 13% CET1 ratio for shareholder returns, barring exceptional circumstances.
The earnings call summary highlights positive elements such as stable NIM, improved asset quality, and a significant shareholder return plan. Despite a slight decrease in noninterest income, other financial metrics show growth. The Q&A section reveals management's proactive approach to managing potential risks and uncertainties, such as NPL coverage and administrative fines. The absence of negative guidance and the focus on maintaining high capital adequacy and shareholder returns further bolster the positive sentiment. Overall, the stock is likely to experience a positive movement due to these factors.
The earnings call summary shows strong financial performance, with increased net profit, gross operating profit, and EPS. Despite high credit loss provisions, the company maintains solid earnings fundamentals and capital adequacy. Shareholder returns are positive, with increased dividends and share buybacks. The Q&A section does not highlight significant management concerns, and the strategic plan indicates proactive management of risks and asset quality. Overall, the company's performance and shareholder commitment suggest a positive stock price movement in the short term.
The earnings call reveals strong shareholder returns, a robust CET1 ratio, and improved credit costs, despite economic challenges. Share buybacks and dividends are substantial, and profitability remains strong with a high ROE. However, supply chain challenges and economic factors pose risks. The Q&A section shows some unclear management responses but no major negative sentiment from analysts. Overall, the positive aspects such as shareholder returns and financial health outweigh the concerns, suggesting a positive stock price movement.
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