KB Financial Group(US:KB)2022-04-22 18:34Financial Data and Key Indicators Changes - Q1 2022 net profit attributable to controlling interest increased by 14% year-over-year to KRW 1.45 trillion, outperforming market consensus by 13% [5] - Annualized EPS rose by 14% year-over-year to KRW 14,892, while ROCE improved by 0.7 percentage points to 13.2% [5] - Group net interest income for Q1 2022 was KRW 2,648 billion, up 18.6% year-over-year [12] - The nominal credit cost for the group was around 15 basis points, with a running basis credit cost of 23 basis points [8][17] - The NPL coverage ratio increased to 218%, up 71 percentage points compared to pre-pandemic levels [8] Business Line Data and Key Indicators Changes - Group's loan in won increased by 9.7% year-over-year, driven by strong demand for SMEs and CIB lending despite declines in household loan balances [6] - Q1 net fee commission income was KRW 915 billion, showing a 3.8% quarter-on-quarter growth despite a slight year-over-year dip [13] - G&A expenses decreased by 2% year-over-year to KRW 1,691.8 billion, with a cost-to-income ratio of 45.4%, down by 4.3 percentage points [9][16] Market Data and Key Indicators Changes - As of the end of March 2022, bank loans in wons stood at KRW 321 trillion, reflecting a 0.8% year-to-date growth [18] - Corporate loans grew by 3.4% year-to-date, amounting to approximately KRW 5 trillion, while household loans decreased by 1.4% year-to-date [19] Company Strategy and Development Direction - The company plans to integrate Prudential Life with KB Life Insurance by the end of the year to improve capital adequacy and market competitiveness [11] - The focus for 2022 includes enhancing shareholder value through a quarterly dividend program and potential share buybacks [10][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 5% to 6% growth rate for corporate loans and a 4.5% growth target for household loans despite current market challenges [41][42] - The company will maintain a flexible interest rate policy while focusing on profitability amidst competitive pressures [44][45] Other Important Information - The company is enhancing its corporate banking digital platform to meet diverse client needs and maintain competitiveness in the market [24][25] - The integration of digitalization efforts is expected to yield cost efficiencies while expanding service offerings [9][24] Q&A Session Summary Question: Shareholder return policy and quarterly dividends - Management confirmed a quarterly dividend of KRW 500 per share for the first three quarters of 2022, with the year-end dividend to be determined based on various factors [34][38] Question: Interest rate strategies and loan demand - Management acknowledged a reduction in household loans due to rising rates and regulations but expects a recovery in demand as market conditions improve [40][42] Question: Impact of IFRS 17 on consolidated statements - Management indicated that the final requirements for IFRS 17 are still being assessed, and the impact will be clearer after the second half of the year [49][51] Question: Outlook for the securities business - Management noted a decline in brokerage fee income but expects improvements in institutional business and overall performance in the second half of the year [56][60] Question: Provisioning and COVID-related loans - Management emphasized a conservative approach to provisioning, with nominal credit costs reflecting a cautious stance despite some reversals [83][87]