KB Financial beats profit forecast on higher interest rates
Bo-Hyung Kim
Oct 24, 2023 (Gmt+09:00)
KB Financial Group Inc., South Korea’s top financial holding company by assets, on Tuesday reported better-than-expected net profit in the third quarter thanks to higher interest rates, although its key profitability slightly deteriorated.
KB Financial said its net profit rose 0.4% to 1.4 trillion won ($1 billion) in the third quarter from a year earlier, beating analysts’ forecast of 1.3 trillion won. The group logged a total net profit of 4.3 trillion won in the first three quarters, up 7.4% on-year, paving the way to become the country’s first financial holding company with an annual net profit of more than 5 trillion won.
The healthy quarterly profit came as the group’s interest income increased with growing loan assets such as corporate lending. Its net interest income rose 6.6% to 3.1 trillion won in the July-September period from a year earlier.
Compared to the previous quarter, the income advanced 3.3%. Its net interest margin, a key measure of profitability in retail banking activities, dipped by 0.01 percentage point to 2.09% on-quarter, however, as funding costs rose on higher market interest rates.
Its net interest income made up 77.9% of the gross operating income in the third quarter, higher than 69.2% in the previous three months.
BANKING UNIT SHINES
The group’s banking unit KB Kookmin Bank logged a net profit of 996.9 billion won in the third quarter, 21% higher than a year earlier, on rising interest rates. The combined net profit of the country’s top lender advanced 12% to 2.9 trillion won in the first three quarters.
On the other hand, the bank’s asset quality deteriorated with the delinquency ratio and non-performing loan ratio at 0.25% and 0.26%, respectively, up from 0.14% and 0.19% a year earlier.
Non-banking units suffered weaker quarterly profits. KB Securities Co. and KB Insurance Co. reported an 8.4% fall and a 10.7% slide in net profits, respectively, while KB Kookmin Card Co. and KB Life Insurance Co. saw a 25.4% drop and a 7.8% fall.
KB Financial decided to pay dividends of 510 won per share for the third quarter, the same as that of the previous three months.