KB Financial joins South Korea's top five in market cap

UPI

4 days ago

KB Financial's share price nearly doubled since 2024, helping it become one of South Korea's five most valuable companies. Photo courtesy of KB Financial Group
SEOUL, May 29 (UPI) -- South Korea's stock market has been ruled by traditional manufacturing companies, including Samsung Electronics, SK hynix, and Hyundai Motor.
However, KB Financial Group has broken into the top five firms by market capitalization this month, nudging past the country's largest automaker, Hyundai Motor, and defense giant Hanwha Aerospace.
The financial group's market capitalization climbed to $28.91 billion Monday to overtake Hanwha Aerospace, with $28.63 billion, and Hyundai Motor, with $27.69 billion.
Although Hanwha Aerospace reclaimed the No. 5 spot Tuesday, KB rebounded Wednesday. This marks the first time in roughly 15 years that KB Financial has become one of the five most valuable corporations in the Seoul bourse.
"Most of all, KB Financial's profitability is outstanding, which has supported its share price since 2024," Hana Securities analyst Choi Jeong-wook told UPI.
"Its diversified portfolio is also attractive. Many of its subsidiaries are leaders in their respective businesses. Its non-banking units accounted for some 40% of the total profits last year," he said.
KB Financial netted $3.6 billion in profit last year, becoming South Korea's first financial company to reach the milestone. During the first quarter of this year, its bottom line amounted to $1.18 billion, up 62.9% from a year earlier.
In the beginning of 2023, KB Financial trailed far behind Hyundai Motor, ranking 18th with a market capitalization of $15.88 billion against the latter's $31.32 billion.
Since then, however, KB Financial's share price has nearly doubled to beat Hyundai Motor, which lost more than 10% during the span.
The group's flagship unit is KB Kookmin Bank, South Korea's largest lender. Also under its umbrella are KB Kookmin Card, KB Securities, KB Insurance and KB Life Insurance.
"Investor sentiment has been buoyed by KB Financial's embrace of the value-up program designed to boost the stock price," NH Investment & Securities analyst Jung Jun-seop said in a phone interview.
In addition, the company recently disclosed s stock buyback plan -- a measure that "seems to win the hearts and minds of investors at home and abroad. The stabilizing foreign exchange rate also helps it," he added.
The value-up program is the Korean government's initiative aimed at addressing the so-called "Korea Discount," which refers to the tendency of Korean stocks to trade at low valuations despite strong fundamentals.
The Seoul administration has tried to encourage enterprises here to strengthen their corporate governance and improve capital allocation to deal with the Korea Discount.
KB Financial was recently honored with the top prize in a government-held value-up award ceremony. Last month, the entity canceled 12 million shares, which were valued at $740 million.
In his recent report, SK Securities analyst Seol Yong-jin said that KB Financial has enjoyed a premium, thanks to its status as a business bellwether.
"KB Financial has demonstrated an advantage over its competitors in terms of foreign investor inflows," he wrote.
As of Wednesday, foreign investors' net purchases of KB Financial stood at around $870 million for the month.
Still, challenges remain, according to some observers.
"Like its smaller competitors, KB Financial has failed to make its presence felt in the global market. The outfit mostly focuses on the domestic market," Seoul-based consultancy Leaders Index CEO Park Ju-gun said.
"In addition, KB Financial depends too heavily on interest profits. The lowered key interest rate is feared to weigh on the group at least in the short term," he predicted.
The Bank of Korea slashed its benchmark interest rate by 0.25% points to 2.5% Thursday. It was the central bank's fourth cut in seven months since last October.
Globally, KB Financial is also recognized as a proactive sponsor of professional golfers, who play on the LPGA Tour. It backs Park In-bee, who topped the podium in the Rio 2016 Summer Olympics.