KB Financial Group(KB) - 2022 Q1 - Quarterly Report

SEC Filing Information KB Financial Group Inc. filed Form 6-K in March 2022 as a foreign private issuer, filing annual reports under Form 20-F - KB Financial Group Inc. filed Form 6-K for March 2022 as a foreign private issuer, indicating its annual reports are filed under Form 20-F[1] Annual General Meeting Details This section outlines the agenda and proposals for KB Financial Group Inc.'s 2021 Annual General Meeting AGM Convocation and Agenda Overview KB Financial Group Inc. announced its March 25, 2022, AGM for FY2021, with an agenda including financial statements, dividends, director appointments, and remuneration limits - Annual General Meeting of shareholders for fiscal year 2021 to be held on March 25, 2022[4] - Key agenda items include approval of financial statements, proposed dividend, appointment of directors (non-standing, non-executive, and audit committee members), approval of director remuneration limit, and a shareholder-proposed non-executive director[8] Agendum 1: Approval of Financial Statements and Dividend Proposal This agenda item seeks shareholder approval for the financial statements and the proposed dividend payment for fiscal year 2021, with detailed statements available as Exhibit 99.1 and 99.2 - Shareholders to approve financial statements and proposed dividend payment for FY2021[10] - Separate and Consolidated Financial Statements for FY2021 are attached as Exhibit 99.1 and 99.2, respectively[12] Agendum 2: Appointment of Directors This agenda item proposes the appointment of one non-standing director and six non-executive directors, highlighting their expertise in finance, risk management, internal controls, legal, and digital innovation - Proposal for the appointment of one non-standing director and six non-executive directors[13] - Nominees include Jae Keun Lee (Non-Standing Director) and Suk Ho Sonu, Myung Hee Choi, Kouwhan Jeong, Seon-joo Kwon, Gyutaeg Oh, Jaehong Choi (Non-Executive Directors)[13] Nominee for Non-Standing Director: Jae Keun Lee Details Jae Keun Lee's career highlights and confirms no conflicts of interest or relationships with the largest shareholder Jae Keun Lee - Career Highlights | Position | Career Highlights | |---|---| | President & CEO, Kookmin Bank (Jan.2022Present) | Senior Executive Vice President, Head of Sales Group, Kookmin Bank (Jan.2020Dec.2021); Senior Managing Director, Head of Strategy & Finance Planning Group, Kookmin Bank (Jan.2019Dec.2019); Managing Director & CFO, KB Financial Group (Jan.2017Dec.2017) | - Nominee Jae Keun Lee has not engaged in any transaction with KB Financial Group Inc. in the past three years and does not have any relationship with the largest shareholder[14] Nominees for Non-Executive Directors Presents the list of non-executive director nominees and confirms their qualifications and independence Non-Executive Director Nominees and Key Positions | Name | Main Position | |---|---| | Suk Ho Sonu | Member of Advisory Committee, Korea Institute of Finance | | Myung Hee Choi | Vice President, Korea Internal Control Assessment Institute | | Kouwhan Jeong | Co-president Attorney at Law, Nambujeil Law and Notary Office Inc. | | Seon-joo Kwon | Chairman & CEO, Industrial Bank of Korea (Dec.2013Dec.2016) | | Gyutaeg Oh | Professor, School of Business Administration, Chung-Ang University | | Jaehong Choi | Professor, Department of Multimedia & IT Engineering, Gangneung-Wonju National University | - All non-executive director nominees meet legal and internal requirements, with no recent transactions with KB Financial Group or relationships with the largest shareholder, and no disqualifying legal grounds[17] Goals and Objectives of Non-Executive Director Nominees Outlines the strategic goals and objectives of the non-executive director nominees, focusing on growth, governance, and digital innovation - Suk Ho Sonu aims to provide advice on long-term strategies, stable growth, value creation, and ESG, leveraging expertise in finance, risk management, and corporate governance[18] - Myung Hee Choi focuses on overseeing internal control systems and improving the non-executive director nominating process, drawing on expertise in internal controls and finance[18] - Jaehong Choi intends to guide the Group in becoming a 'No.1 Financial Platform' through digital innovations, drawing on expertise in mobile, platform, and metaverse technologies[19] Board's Reasons for Recommending Directors Explains the Board's rationale for recommending each director nominee based on their expertise and potential contributions - Jae Keun Lee is recommended for his extensive banking industry knowledge, leadership at Kookmin Bank, and ability to provide solutions in uncertain environments[20] - Myung Hee Choi is recommended for her expertise in finance and internal controls, contributions to compliance, and leadership in the Non-Executive Director Nominating Committee[20] - Jaehong Choi is recommended for his ICT expertise, insights into the IT industry, and potential contributions to digital innovation and the Group's 'No.1 Leading Platform' goal[22] Agendum 3: Appointment of Non-Executive Director for Audit Committee This agenda item proposes the appointment of Kyung Ho Kim as a non-executive director who will also serve as an Audit Committee member, detailing his qualifications and the Board's rationale - Proposal for the appointment of Kyung Ho Kim as a non-executive director and member of the Audit Committee[23] Nominee for Non-Executive Director, Audit Committee Member: Kyung Ho Kim Details Kyung Ho Kim's career, qualifications, and independence as a nominee for the Audit Committee Kyung Ho Kim - Career Highlights | Main Position | Career Highlights | |---|---| | Professor, School of Business Administration, Hongik University (Aug.1991Feb.2020) | Non-Executive Director, Citibank Korea Inc. (Mar.2015Feb.2019); Vice President, Hongik University (Mar.2017Aug.2018); Advisory Board Member, The Korea Development Bank (Apr.2015Dec.2017); Chairman of the Group's Audit Committee (past experience) | - Nominee Kyung Ho Kim has not engaged in any transaction with KB Financial Group Inc. in the past three years and does not have any relationship with the largest shareholder, and meets all legal and internal requirements[25] Goals and Objectives & Board's Reasons for Recommendation Outlines Kyung Ho Kim's objectives for enhancing accounting transparency and the Board's rationale for his recommendation based on expertise - Kyung Ho Kim aims to enhance accounting transparency, ensure efficient internal account control, and monitor management decisions fairly, leveraging his accounting expertise and experience as Audit Committee chairman[26] - The Board recommends Kyung Ho Kim for his extensive accounting expertise, insights into corporate governance, and leadership as chairman of the Audit Committee, particularly in enhancing audit expertise and providing advice on capital and ESG policy[27] Agendum 4: Appointment of Audit Committee Members This agenda item proposes the appointment of Suk Ho Sonu, Myung Hee Choi, and Kouwhan Jeong as Audit Committee members, detailing their qualifications and the Board's reasons for recommendation - Proposal for the appointment of Suk Ho Sonu, Myung Hee Choi, and Kouwhan Jeong as members of the Audit Committee[28] Nominees for Audit Committee Members Lists the nominees for the Audit Committee and confirms their adherence to legal and internal requirements Audit Committee Nominees and Key Positions | Name | Main Position | |---|---| | Suk Ho Sonu | Member of Advisory Committee, Korea Institute of Finance | | Myung Hee Choi | Vice President, Korea Internal Control Assessment Institute | | Kouwhan Jeong | Co-president Attorney at Law, Nambujeil Law and Notary Office Inc. | - All nominees for the Audit Committee meet legal and internal requirements, with no recent transactions with KB Financial Group or relationships with the largest shareholder, and no disqualifying legal grounds[30] Board's Reasons for Recommending Audit Committee Members Explains the Board's rationale for recommending each Audit Committee nominee based on their expertise and contributions - Suk Ho Sonu is recommended for his expertise in finance and risk management and his contributions to the independent operation of the Audit Committee[31] - Myung Hee Choi is recommended for her expertise in finance and internal controls, and her suggestions for effective internal controls and compliance measures[31] - Kouwhan Jeong is recommended for his legal expertise, consumer protection experience, and contributions to enhancing internal control in subsidiaries[31] Agendum 5: Approval of Aggregate Remuneration Limit for Directors This agenda item seeks approval for the aggregate remuneration limit for directors for fiscal year 2022, proposing a maximum of Won 3.0 billion plus up to 30,000 treasury shares for long-term incentives Director Remuneration Limits and Payments | Metric | For fiscal year 2022 (Proposed) | For fiscal year 2021 (Actual) | |---|---|---| | Number of Directors (Non-Executive Directors) | 9 (7)* | 9 (7) | | Aggregate Remuneration Limit | Won 3.0 billion | Won 3.0 billion | | Long-term Incentives (Treasury Shares) | Max 30,000 shares | Not included in Won 1.863 billion, but within approved limit | | Aggregate Remuneration Paid | N/A | Won 1.863 billion* | - The proposed aggregate remuneration limit for directors for FY2022 is Won 3.0 billion, with an additional limit of 30,000 treasury shares for long-term incentives[33] Agendum 6: Shareholder Proposal for Non-Executive Director Appointment This agenda item presents a shareholder proposal to appoint Mr. Young Soo Kim as a non-executive director, which the Board recommends voting against due to qualification concerns - Shareholder proposal by the Labor Union of Kookmin Bank to appoint Mr. Young Soo Kim as a non-executive director[35][36] - The Board of Directors recommends shareholders vote against Agendum 6, citing concerns about the nominee's qualifications under the Financial Company Governance Act and potential conflict of interest[39][41] Nominee for Non-Executive Director: Young Soo Kim Details Young Soo Kim's career highlights and confirms his independence as a shareholder-proposed nominee Young Soo Kim - Career Highlights | Main Position | Career Highlights | |---|---| | Financial Advisor, Pantra Corporation (Jan.2022Present) | Executive Vice President, Korea Overseas Infrastructure & Urban Development Corporation (May.2018Nov.2021); Executive Director and Head of New Growth Business Finance Group/SME Finance Group, The Export-Import Bank of Korea (Jul.2015May.2018) | - Nominee Young Soo Kim has not engaged in any transactions with KB Financial Group during the past three years and does not have any relationships with the largest shareholder, and meets legal grounds for qualification[35][36] Goals and Objectives of Shareholder-Proposed Nominee Outlines Young Soo Kim's objectives to contribute to shareholder value, management oversight, and global business sustainability - Young Soo Kim aims to contribute to shareholder value-centered management, constructively check management, and ensure sustainability of global business by reviewing its direction and enhancing understanding of potential risks[37] Board of Directors' Position on Shareholder Proposal Explains the Board's recommendation to vote against the shareholder proposal, citing concerns about the nominee's qualifications and existing board expertise - The Board of Directors recommends voting against Agendum 6, despite including it on the agenda, as it believes the proposal is not in the best interest of the Group and its shareholders[39] - The Board's Non-Executive Director Nominating Committee concluded that Mr. Young Soo Kim might not qualify due to potential conflict of interest from prior employment with a company having material transactions with a KB Financial Group subsidiary[41] - The Board asserts that its current composition already includes leading experts in global finance, business management, and accounting, making an additional director with global business expertise unnecessary[42] Signatures This section confirms the official signing of the Form 6-K report by KB Financial Group Inc.'s Chief Finance Officer - The Form 6-K report was signed on March 7, 2022, by Scott Y. H. Seo, Senior Managing Director and Chief Finance Officer of KB Financial Group Inc[45] Exhibit 99.1: Separate Financial Statements This exhibit presents the separate financial statements for KB Financial Group Inc. for fiscal years 2021 and 2020 - Exhibit 99.1 contains the separate financial statements of KB Financial Group Inc. for 2021 and 2020[47] Separate Statements of Financial Position The separate statement of financial position for KB Financial Group Inc. shows an increase in total assets and total equity from 2020 to 2021, driven by growth in investments in subsidiaries and hybrid securities, while total liabilities decreased Separate Statements of Financial Position (2021 vs 2020) | (In millions of Korean won) | December 31, 2021 | December 31, 2020 | Change (YoY) | |---|---|---|---| | Assets | | | | | Total assets | W28,871,379 | W28,108,491 | +W762,888 | | Investments in subsidiaries | 26,741,438 | 26,519,880 | +W221,558 | | Liabilities | | | | | Total liabilities | 6,358,405 | 7,122,871 | -W764,466 | | Debentures | 5,552,791 | 6,128,043 | -W575,252 | | Equity | | | | | Total equity | 22,512,974 | 20,985,620 | +W1,527,354 | | Hybrid securities | 2,837,981 | 1,695,778 | +W1,142,203 | | Retained earnings | 3,974,206 | 3,588,757 | +W385,449 | Separate Statements of Comprehensive Income The separate statements of comprehensive income show an increase in profit for the year and total comprehensive income for KB Financial Group Inc. from 2020 to 2021, with basic earnings per share also rising Separate Statements of Comprehensive Income (2021 vs 2020) | (In millions of Korean won) | 2021 | 2020 | Change (YoY) | |---|---|---|---| | Profit for the year | W1,438,866 | W1,379,415 | +W59,451 | | Total comprehensive income for the year | W1,438,568 | W1,379,047 | +W59,521 | | Basic earnings per share | W3,509 | W3,482 | +W27 | | Diluted earnings per share | W3,436 | W3,438 | -W2 | Separate Statements of Changes in Equity The separate statements of changes in equity indicate a significant increase in total equity for KB Financial Group Inc. from 2020 to 2021, primarily driven by the profit for the year and issuance of hybrid securities, partially offset by annual and quarterly dividends Separate Statements of Changes in Equity (2021 vs 2020) | (In millions of Korean won) | December 31, 2021 | December 31, 2020 | Change (YoY) | |---|---|---|---| | Total equity (end of year) | W22,512,974 | W20,985,620 | +W1,527,354 | | Profit for the year | 1,438,866 | 1,379,415 | +W59,451 | | Annual dividends | (689,653) | (861,092) | +W171,439 | | Quarterly dividends | (292,226) | — | -W292,226 | | Issuance of hybrid securities | 1,142,203 | 1,296,693 | -W154,490 | | Dividends on hybrid securities | (71,538) | (22,860) | -W48,678 | Separate Statements of Cash Flows The separate statements of cash flows show a decrease in net cash inflow from operating activities but a significant reduction in net cash outflow from investing activities for KB Financial Group Inc. from 2020 to 2021, leading to a substantial increase in cash and cash equivalents at year-end Separate Statements of Cash Flows (2021 vs 2020) | (In millions of Korean won) | 2021 | 2020 | Change (YoY) | |---|---|---|---| | Net cash inflow from operating activities | W1,346,081 | W1,389,345 | -W43,264 | | Net cash outflow from investing activities | (258,745) | (2,494,020) | +W2,235,275 | | Net cash inflow (outflow) from financing activities | (592,344) | 1,109,222 | -W1,701,566 | | Net increase in cash and cash equivalents | 494,992 | 4,547 | +W490,445 | | Cash and cash equivalents at the end of the year | W518,073 | W23,081 | +W494,992 | Exhibit 99.2: Consolidated Financial Statements This exhibit presents the consolidated financial statements for KB Financial Group Inc. and its subsidiaries for fiscal years 2021 and 2020 - Exhibit 99.2 contains the consolidated financial statements of KB Financial Group Inc. and Subsidiaries for 2021 and 2020[55] Consolidated Statements of Financial Position The consolidated statement of financial position for KB Financial Group Inc. and Subsidiaries shows significant growth in total assets, particularly in loans measured at amortized cost, and an increase in total liabilities, mainly from deposits and debentures, from 2020 to 2021, with total equity also seeing a substantial rise Consolidated Statements of Financial Position (2021 vs 2020) | (in millions of Korean won) | December 31, 2021 | December 31, 2020 | Change (YoY) | |---|---|---|---| | Assets | | | | | Total assets | W663,895,834 | W610,719,944 | +W53,175,890 | | Loans measured at amortized cost | 417,900,273 | 377,166,984 | +W40,733,289 | | Liabilities | | | | | Total liabilities | 615,601,914 | 567,317,587 | +W48,284,327 | | Deposits | 372,023,918 | 338,580,220 | +W33,443,698 | | Debentures | 67,430,188 | 62,760,687 | +W4,669,501 | | Insurance liabilities | 57,165,936 | 54,415,296 | +W2,750,640 | | Equity | | | | | Total equity | 48,293,920 | 43,402,357 | +W4,891,563 | | Retained earnings | 25,672,815 | 22,540,616 | +W3,132,199 | Consolidated Statements of Comprehensive Income The consolidated statements of comprehensive income show strong growth in net interest income, net fee and commission income, and net insurance income for KB Financial Group Inc. and Subsidiaries from 2020 to 2021, resulting in a substantial increase in profit for the year and basic earnings per share Consolidated Statements of Comprehensive Income (2021 vs 2020) | (in millions of Korean won) | 2021 | 2020 | Change (YoY) | |---|---|---|---| | Net interest income | W11,229,572 | W9,722,274 | +W1,507,298 | | Net fee and commission income | 3,625,583 | 2,958,939 | +W666,644 | | Net insurance income | 556,711 | 299,993 | +W256,718 | | Profit for the year | 4,384,381 | 3,515,578 | +W868,803 | | Total comprehensive income for the year | W4,607,139 | W3,987,848 | +W619,291 | | Basic earnings per share | W11,134 | W8,843 | +W2,291 | | Diluted earnings per share | W10,890 | W8,730 | +W2,160 | Consolidated Statements of Changes in Equity The consolidated statements of changes in equity reflect a significant increase in total equity for KB Financial Group Inc. and Subsidiaries from 2020 to 2021, primarily due to the profit for the year and issuance of hybrid securities, partially offset by dividends paid to shareholders and on hybrid securities Consolidated Statements of Changes in Equity (2021 vs 2020) | (in millions of Korean won) | December 31, 2021 | December 31, 2020 | Change (YoY) | |---|---|---|---| | Total equity (end of year) | W48,293,920 | W43,402,357 | +W4,891,563 | | Profit for the year | 4,384,381 | 3,515,578 | +W868,803 | | Annual dividends paid to shareholders of the Parent Company | (689,653) | (861,092) | +W171,439 | | Quarterly dividends paid to shareholders of the Parent Company | (292,226) | — | -W292,226 | | Issuance of hybrid securities | 1,142,233 | 1,296,783 | -W154,550 | | Dividends on hybrid securities | (71,537) | (22,860) | -W48,677 | Consolidated Statements of Cash Flows The consolidated statements of cash flows show a reduced net cash outflow from operating and investing activities for KB Financial Group Inc. and Subsidiaries from 2020 to 2021, but a significant decrease in net cash inflow from financing activities, resulting in a lower net increase in cash and cash equivalents Consolidated Statements of Cash Flows (2021 vs 2020) | (in millions of Korean won) | 2021 | 2020 | Change (YoY) | |---|---|---|---| | Net cash outflow from operating activities | W(6,700,265) | W(11,540,694) | +W4,840,429 | | Net cash outflow from investing activities | (3,856,014) | (10,988,410) | +W7,132,396 | | Net cash inflow from financing activities | 10,821,398 | 25,262,276 | -W14,440,878 | | Net increase in cash and cash equivalents | 423,368 | 2,561,367 | -W2,137,999 | | Cash and cash equivalents at the end of the year | W9,108,460 | W8,685,092 | +W423,368 |