KB Financial Group(US:KB)2022-02-08 21:16Financial Data and Key Indicators Changes - In 2021, net profit on a controlling share basis increased by 28% year-over-year to KRW 4.41 trillion, meeting market consensus [4] - Diluted EPS rose by 25% to KRW 10,891, while ROE improved by 1.4 percentage points to 10.2% [4] - The group's credit costs were around 30 basis points, which is 1.5 times the pre-COVID average [6] - The NPL coverage ratio increased to 209%, up 62 percentage points compared to pre-COVID levels [6] Business Line Data and Key Indicators Changes - Non-bank contributions to net profit rose from 30% to 43% in 2021 [6] - Group's net interest income for 2021 was KRW 11,229.6 billion, up 15.5% year-over-year [13] - Net fees and commissions income increased by 22.5% year-over-year to KRW 3,625.6 billion [15] - Other operating profit was impacted by rising market rates, leading to a decrease of KRW 183 billion year-over-year [16] Market Data and Key Indicators Changes - The bank's loan portfolio reached KRW 390 trillion, reflecting a 7.9% year-to-date growth [24] - Corporate loans reported a year-to-date growth of 11.2%, driven by acquisition financing [25] - The group's NIM for 2021 was 1.85%, with a quarterly improvement of three basis points [26] Company Strategy and Development Direction - The company aims to redefine itself as a leading financial platform, launching initiatives like the KB store banking super app and Liiv Next for Gen Z [10] - Plans to enhance shareholder value include a payout ratio set at 26% and potential share buybacks [9] - The company is focusing on diversifying revenue sources and improving asset management capabilities [33] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about potential deterioration in non-interest income and asset quality due to interest rate hikes and the end of COVID-19 forbearance programs [31] - The company plans to strengthen its asset quality management system in response to rising credit risks [34] - Management is optimistic about maintaining profitability through diversified business portfolios and improved risk management [32] Other Important Information - The company has set a goal to achieve a 40% cost-income ratio in the mid-to-long term [28] - The group plans to continue its digital transformation efforts to enhance competitiveness in the financial services market [36] Q&A Session Summary Question: Inquiry about capital management and future dividend policies - Management indicated a desire to normalize the payout ratio to 30% and is considering options for share buybacks and quarterly dividends [42][43] Question: Concerns about non-interest income performance across different business lines - Management acknowledged potential discrepancies in performance among subsidiaries and emphasized ongoing efforts to enhance non-interest earnings [41] Question: Digital transformation goals and customer engagement strategies - The company aims for a MAU goal of 15 million for its super app and plans to enhance customer engagement through innovative content and services [58][59] Question: Asset quality management and risk exposure - Management reassured that high collateral rates and strict monitoring of high-risk sectors will mitigate potential risks [60][61] Question: Outlook on net interest margin and Prudential Life's variable exposure - Management expects a 7 to 8 basis points increase in net interest margin, contingent on interest rate movements [66]