KB Financial Group(KB) - 2024 Q4 - Annual Report

Capital Adequacy and Financial Stability - As of December 31, 2024, the company maintained a common equity Tier I capital adequacy ratio of 13.53%, exceeding the required minimum of 9.0%[116] - The company is subject to an additional capital requirement of 1.0% for being designated as a domestic systemically important bank for 2024 and 2025[117] - The company’s capital adequacy ratios may deteriorate if its results of operations decline, particularly due to asset quality issues in retail loans[116] Debt Securities and Market Risks - The company held debt securities with a total carrying amount of ₩56,301 billion as of December 31, 2024, which may be subject to significant market value declines due to various factors[109] - The company may face challenges in realizing the full book value of debt securities due to the underdeveloped secondary market for corporate bonds in Korea[109] - A sustained increase in interest rates could lead to a decline in the value of the company's debt securities and increase funding costs, potentially reducing loan demand among retail borrowers[119] - Rising interest rates may adversely affect the repayment ability of corporate and retail borrowers, leading to a deterioration in the company's credit portfolio[120] - The company's insurance subsidiaries may face lower profitability due to insufficient yields on general account assets to fund higher floating interest credit rates during periods of increasing interest rates[122] Funding and Liquidity - Approximately 94.6% of the company's deposits had maturities of one year or less or were payable on demand as of December 31, 2024, indicating a high dependence on short-term funding sources[114] Risk Management and Operational Challenges - The company’s risk management strategies may not be effective in times of significant market stress, potentially leading to increased operational risks[102] - The company’s operations are exposed to cybersecurity risks, which could result in financial losses and reputational damage[113] - The company has established an internal control committee to enhance its internal control systems in response to regulatory changes effective in July 2024[103] Regulatory and Economic Environment - Strengthening consumer protection laws in Korea may limit the company's operational flexibility and increase compliance costs, adversely affecting business performance[126] - The Financial Services Commission may impose burdensome measures if the company is deemed financially unsound, potentially harming business operations and financial condition[130] - Unfavorable financial and economic developments in Korea, including declines in consumer confidence and potential political instability, could adversely impact the company's business and financial results[138] - Escalating tensions with North Korea could adversely affect the Korean economy and the market value of the company's securities[131] Market Conditions and Stock Performance - The KOSPI index was 2,522.3 on April 24, 2025, indicating market volatility[154] - The market value of investments in ADSs may fluctuate due to the volatility of the Korean securities market[154] - Fluctuations in the exchange rate between the U.S. dollar and the Won will affect dividend payments and sales proceeds for ADS holders[153] Corporate Structure and History - Kookmin Bank was established in 1963 as Citizens National Bank with majority government ownership, focusing on banking services for the general public and SMEs[163] - In 1995, Kookmin Bank transitioned to a nationwide commercial bank, allowing lending to large businesses after the repeal of the Citizens National Bank Act[164] - The merger of the former Kookmin Bank and H&CB on November 1, 2001, resulted in Kookmin Bank becoming the largest commercial bank in Korea[166] - KB Financial Group was established on September 29, 2008, through a comprehensive stock transfer, reorganizing Kookmin Bank and its subsidiaries under a holding company structure[167] - Following the stock transfer, Kookmin Bank's common stock was listed on the KRX KOSPI Market on October 10, 2008, and its ADSs were listed on the New York Stock Exchange on September 29, 2008[169] Government Influence and Economic Indicators - The Korean government has promoted lending to specific sectors, which may influence the company's lending practices and could incur costs or losses[128] - The Korean government has the potential to influence the private sector, which may affect market prices and liquidity of securities[156] - The unemployment rate in Korea decreased from 2.9% in 2022 to 2.7% in 2023, but is projected to increase to 2.8% in 2024[141] - The Korean National Pension Service held approximately 8.41% of the total issued common stock as of December 31, 2024, which may be sold at any time[142] - The Korean government may impose restrictions on converting and remitting dividends in U.S. dollars during emergency circumstances[157] - Ownership of common stock is restricted under Korean law, with a limit of 10% for single stockholders[144] Labor and Economic Challenges - The company may face adverse effects from labor unrest and economic difficulties in Korea, potentially impacting operations and financial conditions[141]