Financial Position - Total assets as of September 30, 2024, amounted to W745,334,299 million, an increase from W715,738,152 million as of December 31, 2023, representing a growth of approximately 4.5%[13] - Total liabilities increased to W685,424,283 million from W656,864,842 million, reflecting a rise of about 4.3%[13] - Total equity attributable to shareholders of the Parent Company reached W57,948,499 million, up from W56,929,804 million, indicating an increase of approximately 1.8%[13] - Total equity as of September 30, 2023, was W58,814,335 million, reflecting a decrease of W36,447 million from the previous period[22] - As of September 30, 2024, total equity increased to W59,910,016 million, showing growth from the previous year[22] Income and Revenue - Interest income for Q3 2024 reached W7,637,802 million, a 3% increase from W7,413,308 million in Q3 2023[15] - Net interest income for the nine months ended September 30, 2024, was W9,522,689 million, up 6.3% from W8,958,317 million in the same period of 2023[15] - Fee and commission income for Q3 2024 was W1,342,678 million, representing a 3.8% increase compared to W1,292,826 million in Q3 2023[15] - Net operating income for the nine months ended September 30, 2024, was W7,015,248 million, an increase of 14.3% from W6,139,347 million in the same period of 2023[15] - Profit before income tax expense for Q3 2024 was W2,284,151 million, a 20% increase from W1,903,078 million in Q3 2023[15] - Total comprehensive income for the period in Q3 2024 was W1,333,711 million, compared to W1,523,028 million in Q3 2023[19] - Basic earnings per share for Q3 2024 were W4,129, up from W3,444 in Q3 2023[19] - The company reported a total comprehensive income of W2,586,587 million for the period ending September 30, 2024[22] - Total net operating revenues for the nine-month period ended September 30, 2024, reached W13,367,317 million, a significant increase compared to the previous year[107] Cash Flow and Investments - Cash and due from financial institutions decreased to W26,228,938 million from W29,836,311 million, a decline of about 12.0%[13] - Net cash inflow from operating activities decreased to W5,006,802 million in 2024 from W5,306,326 million in 2023, a decline of about 5.6%[25] - Net cash outflow from investing activities increased to W3,433,037 million in 2024 compared to W2,017,297 million in 2023, representing a significant increase of approximately 70.3%[29] - Net cash outflow from financing activities rose to W5,458,886 million in 2024, up from W1,930,927 million in 2023, indicating an increase of around 182.5%[29] - The Group's acquisition of financial investments totaled W31,072,493 million in 2024, down from W32,901,359 million in 2023, showing a decrease of about 5.6%[29] Credit and Risk Management - Current income tax liabilities increased significantly to W408,170 million from W145,335 million, a rise of approximately 180.5%[13] - The Group's risk management system focuses on credit risk, market risk, liquidity risk, and operational risk, with significant risks quantified using internal capital or Value at Risk (VaR) methods[54] - Credit risk management includes assigning credit ratings to all loan customers, with regular evaluations to manage credit risks effectively[60] - The Group's expected credit losses for loans classified as financial assets at amortized cost totaled W219,893,227 million for corporate loans, with a lifetime not impaired amounting to W25,392,537 million[69] - The provision for credit losses for the nine months ended September 30, 2024, was W1,479,143 million, compared to W1,768,170 million in the same period of 2023[15] Loans and Allowances - Loans measured at amortized cost increased to W466,006,550 million from W444,805,287 million, representing a growth of about 4.5%[65] - The total maximum exposure to credit risk as of September 30, 2024, was W943,783,822 million, compared to W913,028,901 million at the end of 2023, indicating an increase of approximately 3.4%[65] - The allowance for credit losses for due from financial institutions increased to W1,707 million, with a provision of W650 million during the period[164] - The ending balance of 12-month expected credit losses is W426,782,354 million, while lifetime expected credit losses (not impaired) stand at W39,434,776 million and impaired at W5,240,544 million[200] Financial Instruments and Fair Value - The Group's financial statements are prepared based on the historical cost accounting model, with the functional currency being Korean won[45][46] - The Group employs external valuation services alongside internal models to determine the fair value of financial instruments at the end of each reporting period[135] - The total financial assets at fair value through profit or loss amounted to W76,935,965 million, with a significant portion in debt securities at W71,775,639 million[124] - The fair value of financial assets at fair value through other comprehensive income reached W89,451,645 million, primarily driven by debt securities valued at W85,234,138 million[124] - The total financial liabilities designated at fair value through profit or loss was W6,898,320 million, indicating a diverse liability structure[124] Operational Performance - The company anticipates continued growth in its banking and insurance services, supported by strategic market expansions and new product developments[110] - The life insurance segment generated W740,482 million in profit, contributing positively to overall financial performance[108] - The securities segment reported net operating income of W729,851 million, highlighting its importance in the company's portfolio[108] - The Group's banking business includes corporate and retail banking, with a focus on loans and deposit products for various customer segments[106] Dividends and Shareholder Returns - The company paid annual dividends of W564,970 million to shareholders of the Parent Company during the period[22] - Profit attributable to shareholders of the Parent Company was W4,395,289 million, showcasing a solid profit margin[108]

Financial Data and Key Metrics - Q3 2024 cumulative net profit was KRW 4.3953 trillion, up 0.4% year-over-year, driven by strong performance in nonbank subsidiaries such as securities, insurance, and credit card businesses [12] - Q3 net profit was KRW 1.614 trillion, down Q-over-Q due to base effects from sizable provisioning last quarter for ELS compensation [12] - Cumulative credit cost improved by 11 basis points year-over-year to 0.41% in Q3 [13] - CET1 ratio increased by 25 basis points Q-over-Q to 13.85% as of September 2024 [10] - Net interest income in Q3 was KRW 3.165 trillion, down 1.3% Q-over-Q due to interest rate cuts [14] - Net fees and commission income in Q3 was KRW 942.7 billion, up 2.5% Q-over-Q, driven by bancassurance and securities investment banking fees [14] - Other operating profit in Q3 was KRW 398.7 billion, up 23.4% Q-over-Q, driven by market and FX rate movements [15] - G&A expense in Q3 was KRW 1.6508 trillion, up 3.6% Q-over-Q, while cumulative CIR was 36.5% [15] - PCL in Q3 was KRW 498.1 billion, down 9.9% Q-over-Q, due to reduced provisioning at nonbank subsidiaries [15] - Nonoperating profit in Q3 declined by KRW 140 billion Q-over-Q due to base effects from ELS compensation provisioning [16] - Cumulative group ROE in Q3 2024 was 11.26%, above the target of 10% [16] - Bank's total loan in won as of September 2024 was KRW 362 trillion, up 2.9% versus June and 5.9% year-to-date [16] - Group and bank's NIM in Q3 was 1.95% and 1.71%, respectively, down 13 basis points Q-over-Q [17] Business Line Performance - Nonbank subsidiaries, including securities, insurance, and credit card businesses, performed well despite rate cuts and a sluggish economy [12] - Household loans increased by 2.7% or KRW 4.6 trillion versus June, driven by rising transaction volumes [16] - Corporate loans increased by 3.2% compared to June, with SME loans trending upward [17] Market Performance - The real estate PF market stabilization led to some provisioning reversals, contributing to stable credit cost management [18] - The CET1 ratio of 13.85% as of September 2024 reflects the industry's top level of capital buffer [13] Strategic Direction and Industry Competition - The company is focusing on sustainable and predictable shareholder returns, linking them to CET1 ratio [5][6] - KB Financial Group aims to maintain industry-leading shareholder returns, with a total shareholder return ratio of 37.7% in 2023 [4] - The company is reorganizing its business management system to focus on RWA-centric growth and fundamental earnings generation [6] - KB plans to maintain a CET1 ratio above 13.5% throughout the year, using excess capital for share buybacks and dividends [10][11] Management Commentary on Operating Environment and Future Outlook - Management emphasized the importance of sustainability and predictability in shareholder returns [4][5] - The company expects to maintain robust credit cost control despite macroeconomic uncertainties [13] - Management anticipates steady NIM levels in Q4 2024, with loan growth slowing due to government controls on household lending [17] - The company plans to focus on quality-driven growth rather than loan book expansion, aiming for sustainable interest income generation [18] Other Important Information - The company approved a quarterly cash dividend of KRW 795 per share and an additional share buyback and cancellation of KRW 100 billion [11] - KB Financial Group plans to enhance communication with investors by providing a value-up bulletin board on its website and allowing individual investors to submit questions before earnings releases [19] Q&A Session Summary Question: RWA growth target and shareholder return [21] - The company targets RWA growth at around 5%, aligning with nominal GDP growth, and does not set a specific TSR target but focuses on increasing the absolute amount of shareholder returns [23][24] Question: RoRWA targets and balance between dividends and share buybacks [25] - The company will set RoRWA targets for 2025 and link them to executive compensation, with a focus on expanding share buybacks until PBR reaches 1.0 [26][27] Question: Timing of share buybacks based on CET1 ratio [29] - Share buybacks in the second half are based on the CET1 ratio as of the second quarter, with potential adjustments based on special circumstances [29] Question: Compensation plan alignment with value-up program [32] - The company is aligning KPIs with the value-up program, emphasizing RoRWA and expanding incentives to sales teams [32][33] Question: Competitive edge and NIM outlook [35] - The company's value-up program is characterized by sustainability and predictability, with CET1-linked shareholder returns [36] - NIM is expected to remain steady in Q4 2024, with similar quarterly NIM levels anticipated for next year [39][41] Question: Sensitivity of RWA to external factors [43] - FX rate fluctuations have a minor impact on RWA, with a 1 basis point effect for every KRW 10 change [44] Question: Credit cost projections and real estate PF market [47] - The company expects credit cost to remain around 40 basis points, with reversals from preemptive provisioning in real estate PF [47][48]

Core Viewpoint - The article emphasizes the importance of confirming the sustainability of stock trends for profitable short-term investing, highlighting the utility of a "Recent Price Strength" screen to identify stocks with strong fundamentals and upward momentum [1]. Group 1: Stock Performance - KB Financial has shown a solid price increase of 5.5% over the past 12 weeks, indicating investor confidence in its potential upside [2]. - The stock has also experienced a price increase of 6.1% over the last four weeks, suggesting that the upward trend is still intact [2]. - Currently, KB is trading at 89% of its 52-week high-low range, indicating a potential breakout opportunity [2]. Group 2: Fundamental Strength - KB Financial holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [3]. - The Zacks Rank system has a strong historical performance, with Rank 1 stocks generating an average annual return of +25% since 1988 [3]. - The Average Broker Recommendation for KB is also 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [3]. Group 3: Investment Strategy - The article suggests that investors should consider other stocks that meet the "Recent Price Strength" criteria, in addition to KB Financial [4]. - It highlights the availability of over 45 Zacks Premium Screens tailored to different investing styles, which can help identify winning stock picks [4]. - The Zacks Research Wizard tool allows backtesting of stock-picking strategies, enhancing the effectiveness of investment decisions [4].

Group 1 - Korea is implementing a "value up" initiative to enhance corporate governance, similar to Japan's approach [1] - KB Financial Group Inc. is identified as a primary beneficiary of this initiative, although it has not yet realized the expected benefits [1]

Financial Performance - Total net operating revenues for the first half of 2024 reached W8,671,562 million, a significant increase compared to W8,671,562 million in the same period of 2023[5] - Net interest income for the first half of 2024 was W5,833,669 million, up from W5,365,788 million in the first half of 2023, reflecting a growth of approximately 8.7%[5] - The life insurance segment reported revenues of W205,189 million for the first half of 2024, compared to W215,461 million in the same period of 2023, indicating a decline of about 4.9%[5] - The company reported a profit for the period for the six months ended June 30, 2024, was W2,773,879 million, an increase of 13.5% from W3,014,922 million in the same period of 2023[67] - Total comprehensive income for the six months ended June 30, 2024, was W1,252,876 million, compared to W3,641,693 million in the same period of 2023, showing a decrease of 65.6%[68] - Basic earnings per share for the six months ended June 30, 2024, were W7,041, up from W3,776 in the same period of 2023, reflecting an increase of 86.0%[68] Assets and Liabilities - The total assets of the company as of June 30, 2024, amounted to W722,984,946 million, with financial assets at fair value through profit or loss totaling W77,708,742 million[9] - The total carrying amount of loans measured at amortized cost was W455,873,383 million as of June 30, 2024[9] - The company’s total financial liabilities were W623,425,366 million, with deposits accounting for W420,217,889 million[9] - Total liabilities reached W682,409,720 million, an increase from W656,864,842 million at the end of 2023, reflecting a growth of approximately 3.9%[85] - The company reported a net increase in cash and cash equivalents of W1,253,590 million for the first half of 2024, compared to W22,086 million in the same period of 2023[72] Income and Expenses - The company’s total insurance income for the first half of 2024 was W5,339,779 million, with insurance expenses amounting to W4,507,557 million, resulting in a net insurance income of W832,222 million[5] - The company experienced a net other operating expense of W690,568 million for the six months ended June 30, 2024, compared to W718,208 million in the same period of 2023, reflecting a decrease of 3.8%[67] - The company reported a provision for credit losses of W981,088 million for the six months ended June 30, 2024, compared to W1,319,485 million in the same period of 2023, indicating a decrease of 25.7%[67] Risk Management - The company has implemented risk management strategies to mitigate market risks, including interest rate and currency risks[36] - The Risk Management Department regularly measures and monitors interest rate risk and liquidity risk, ensuring compliance with established limits[51] - The Group's risk management system focuses on increasing risk transparency and managing significant risks such as credit risk, market risk, and liquidity risk[105] Investments - The company reported a net gain on financial instruments at fair value through profit or loss of W1,159,314 million for the first half of 2024[5] - Financial assets at fair value through profit or loss amounted to W33,672,956 million as of June 30, 2024, with debt securities contributing W33,401,468 million[18] - The total financial assets at fair value through other comprehensive income were W45,219,212 million, indicating a diversified investment portfolio[18] Shareholder Information - Dividends paid increased to W887,092 million in the first half of 2024, compared to W760,936 million in the same period of 2023, marking an increase of approximately 16.6%[72] - The total equity attributable to shareholders of the Parent Company increased to W57,152,838 million from W56,929,804 million at the end of 2023, reflecting a growth of about 0.4%[85] - The Parent Company's share capital remained stable at W2,090,558 million as of June 30, 2024[73] Cash Flow - For the six-month period ended June 30, 2024, the net cash flow from operating activities was W821,945.1 million, compared to W295,835.3 million in the same period of 2023, representing a significant increase[91] - Net cash inflow from investing activities was reported at (W6,368,921) million for the first half of 2024, a significant decrease from W1,725,015 million in the same period of 2023[72] - The company reported a decrease in net cash outflow from financing activities to W912,307 million, down from W4,700,986 million in the first half of 2023[72]

Group 1: Company Overview - KB Financial Group was established in 2008 as a financial holding company, allowing for the reorganization of various businesses and subsidiaries under Kookmin Bank [2] - As of December 31, 2023, KB Financial Group had total assets of KRW 716 trillion, making it one of the largest financial holding companies in Korea [15] - The company operates an extensive banking network with 797 branches and serves approximately 37.6 million retail customers [3] Group 2: Financial Performance - KB Financial Group's net interest income has been steadily growing, reaching $9.4 billion in 2023 [6] - The company's EBIT margins have been rising over the past decade, indicating healthy financial performance [7] - The stock is currently trading at a forward PE ratio of approximately 6x, showing significant growth from previous years [8] Group 3: Shareholder Returns and Value Up Program - The Board of Directors has approved a quarterly cash payout of KRW 791 per share and a share buyback totaling KRW 400 billion, reflecting a commitment to enhancing total shareholder return [11] - The Value Up program aims to maximize shareholder value, with KB Financial Group actively participating and leading in this initiative [20][22] - The management's commitment to share buybacks and shareholder-friendly policies is expected to drive the company's valuation closer to its book value [26] Group 4: Market Context and Challenges - The "Korea Discount" refers to the historical undervaluation of South Korean companies due to weak corporate governance and low dividend payouts [36] - Recent government incentives and aligned management efforts are aimed at reducing this valuation gap, creating opportunities for value investors [12] - The Value Up program, inspired by successful initiatives in Japan, seeks to improve corporate valuations and attract investment [35]

Financial Data and Key Metrics - CET1 ratio increased by 17 basis points QoQ to 13.59%, the highest in the domestic market [1] - Q2 other operating profit posted KRW323.1 billion, a 19.5% QoQ increase, driven by improved financial market conditions and securities investment performance [2] - First half cumulative other operating profit was KRW593.5 billion, lower YoY due to interest rate and FX rate effects on securities, FX, and derivatives [2] - Q2 non-operating profit grew significantly QoQ due to the reversal of large-scale ELS provisioning in Q1 [3] - First half group net fee and commissions income increased 2.4% YoY to KRW1,909.8 billion, driven by higher stock transaction amounts and brokerage income [11] - Q2 group net fee income was KRW919.7 billion, slightly down QoQ due to a decline in IB fees from real estate PF market contraction [11] - Q2 provision for credit losses increased QoQ to KRW552.6 billion, mainly due to additional provisioning for real estate trust and conservative provisioning stance [12] - First half cumulative provision for credit losses decreased significantly YoY to KRW981 billion, reflecting preemptive large-scale provisioning in the previous year [12] - Q2 net interest income increased 9% YoY and 1.7% QoQ to KRW3,206.2 billion, driven by loan average balance growth and interest income expansion [23] - First half group net interest income was KRW6,357.7 billion [23] - Q2 group and bank NIM declined by 3 basis points QoQ to 2.08% and 1.84%, respectively, due to spread contraction and market interest rate decline [25] - First half group ROE was 10.78%, with recurring ROE (excluding one-offs) at 12.26% [24] - Q2 credit cost ratio was 43 basis points, slightly increased QoQ but remains stable [26] - First half group CIR was 36.4%, showing downward stabilization due to cost efficiency efforts [14] - First half G&A expenses increased 2% YoY to KRW3,222.1 billion, with Q2 G&A decreasing 2.1% QoQ [34] Business Line Performance - Insurance income increased KRW185.7 billion YoY in the first half, driven by non-life insurance IBNR reserve reversal and improved loss ratios [2] - Bank loans in won grew 2.3% QoQ and 2.9% YTD to KRW352 trillion, with loan demand recovering in Q2 [13] - Household loans increased 3.0% YTD to KRW172 trillion, driven by home transaction increases [74] - Corporate loans increased 2.7% YTD, supported by large corporate loans and moderate SME loan growth [74] Market Performance - Banking sector prices showed strength due to high expectations for the value-up program [10] - Real estate PF market contraction impacted IB fees and provisioning [11][12] Company Strategy and Industry Competition - The company is committed to a progressive dividend policy and enhancing shareholder returns through share buybacks and cancellations [1][9][21] - The company plans to maintain a CET1 ratio at 13.5% and improve capital adequacy to enhance shareholder return visibility [80] - The company is focusing on cost efficiency and labor cost reduction to stabilize CIR [22] - The company is preparing for value-up disclosures, focusing on capital ratio, ROE improvement, and shareholder value enhancement [44] Management Commentary on Operating Environment and Future Outlook - Macro uncertainties continue, but the company has ample capacity to respond with conservative provisioning and rigorous risk management [10] - The company expects to maintain stable credit costs and asset quality despite economic slowdown concerns [10][12] - The company plans to focus on qualitative growth in asset quality and profitability in the second half [74] - The company is cautious about the real estate PF market, with conservative provisioning and a focus on senior loans [43][77] Other Important Information - The company announced a quarterly cash payout of KRW791 per share and a KRW400 billion share buyback and cancellation, totaling KRW720 billion for shareholder returns [21] - The company has about 14 million treasury shares, with no plans to release them into the market [66] Q&A Session Summary Questions and Answers - **Question:** Will there be changes in the value-up disclosure? **Answer:** The company is implementing measures under the value-up program, including quarterly dividends and share buybacks, but has not yet made the disclosure [17] - **Question:** Will shareholder return calculations shift to a calendar basis? **Answer:** The company will integrate shareholder return calculations on a calendar basis going forward [30][82] - **Question:** What is the outlook for NIM and defensive strategies against interest rate declines? **Answer:** The company expects NIM to remain flat YoY and will focus on core deposit growth and funding cost management [31][63][65] - **Question:** What is the status of asset quality and provisioning for real estate PF? **Answer:** The company has accumulated sizable provisioning and maintains a conservative stance, with senior loans accounting for over 95% of property loans [42][43][77] - **Question:** What is the expected credit cost for the year? **Answer:** The recurring credit cost is around 40 basis points, with conservative provisioning in place [68] - **Question:** Will there be additional shareholder returns beyond the KRW720 billion announced? **Answer:** The company plans to gradually increase shareholder returns and will decide on additional measures based on the situation [81] - **Question:** What is the appropriate level of coverage ratio for NPLs? **Answer:** The company considers 130%-140% as an appropriate coverage ratio, depending on the macro environment [58][79]

Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns. Looking at this fiscal year, KB expects sol ...

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies. Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of ...

NoonBuSin/iStock via Getty Images Elevator Pitch KB Financial Group Inc. (NYSE:KB) [105560:KS] shares are awarded a Buy investment rating. I previously wrote about KB's new CEO appointment and regulatory developments relating to South Korea's financial services industry in my October 5, 2023 update. This latest write-up highlights KB Financial's valuation re-rating potential that supports a Buy rating for the stock. Investors are getting more interested in Korean banks, and KB intends to reveal its value en ...