KB Financial logs industry's first W5tr annual earnings
KB Financial Group cemented its market dominance in 2024, becoming the first local financial firm to surpass 5 trillion won ($3.5 billion) in annual earnings.
The company reported a net profit of 5.08 trillion won last year, up 10.5 percent from 4.59 trillion won in 2023, passing the 5 trillion won milestone ahead of any other Korean banking giant. Fourth-quarter net profit came in at 683 billion won.
The group cited growth in non-banking revenue as driving the strong performance. KB Securities led the increase among key non-banking subsidiaries, with net profit surging 50.3 percent on-year to 585.7 billion won. KB Insurance posted a 17.7 percent gain to 839.5 billion won, while KB Kookmin Card's net profit rose 14.7 percent to 402.7 billion won. As a result, the banking arm's share of the group's net profit fell from 67 percent in 2023 to 60 percent.
Total net interest income across subsidiaries rose to 12.83 trillion won last year. The group attributed the 5.3 percent on-year increase to strong loan demand driven by rate-cut expectations, which boosted the bank's average loan assets, along with steady growth in interest income from non-banking units.
Profitability also improved, with return on equity climbing 0.59 percentage point to 9.72 percent. The cost-to-income ratio fell to a record-low 40.7 percent for the second consecutive year. As of year-end, the Common Equity Tier 1 ratio stood at 13.5 percent, while the BIS capital adequacy ratio reached 16.41 percent, both maintaining industry-leading levels.
KB Kookmin Bank, the group's benchmark banking arm, reported an annual net profit of 3.25 trillion won last year, a 0.3 percent decline from 2023. The decrease was attributed to a large provision set aside in the first quarter for a crisis related to equity-linked securities tracking Hong Kong stocks.
The bank's fourth-quarter net profit fell 43 percent from the previous quarter to 633.9 billion won, weighed down by hefty one-off expenses from voluntary retirements and lower gains on securities, derivatives and foreign exchange amid a weaker won and declining stock prices. This contributed to the group's 57.7 percent on-quarter drop in net profit for the period.
Despite higher interest income, both the group and the bank saw their net interest margins decline due to falling market rates, reaching 2.03 percent and 1.78 percent, respectively. However, in the fourth quarter, the NIM improved from the previous quarter to 1.95 percent for the group and 1.71 percent for the bank.
KB Financial announced that its board approved a year-end cash dividend of 804 won per share, bringing the total shareholder return ratio to a record high of 39.8 percent.
Additionally, the company plans to return 1.76 trillion won to shareholders this year, representing capital exceeding the 13 percent CET1 ratio target for 2024, as part of its shareholder return strategy for 2025. Of the 1.76 trillion won, the company has resolved to allocate 520 billion won for share buybacks and cancellations, taking into account the total annual cash dividend amount. This aligns with the firm's shareholder return framework, which links payouts to the CET1 ratio, as outlined in its corporate value-enhancement plan announced in October.
Under this framework, the company plans additional shareholder returns in the second half by allocating capital exceeding its 13.5 percent CET1 ratio target from the first half.
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