KB Financial Group Inc. (NYSE:KB) Q4 2024 Earnings Call Transcript
KB Financial Group Inc. (NYSE:KB) Q4 2024 Earnings Call Transcript February 7, 2024
KB Financial Group Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Peter Kweon: Greetings. I am Peter Kweon, the head of IR at KBFG. We will now begin the 2023 full year business results presentation. I would like to express my deepest gratitude to everyone for participating today. We have here with us, our group CFO and SEVP, Jae Kwan Kim, as well as other members from our group management. We will first hear the 2023 major financial highlights from CFO and SEVP, Jae Kwan Kim, and then engage in a joint Q&A session. I would like to invite our CFO and SEVP to deliver our 2023 earnings results.
Jae Kwan Kim: Good afternoon. I am Jae Kwan Kim, the CFO of KB Financial Group. Thank you for taking part in our 2023 earnings presentation. Before going into the details of the business results. Let me briefly walk you through the key financial highlights for the year of 2023 of KB Financial Group. KB Financial Group's net profit attributable to controlling interest for 2023 posted KRW4,631.9 billion, it is up 11.5% Y-o-Y, driven by non-interest income led solid earnings improvements and stable cost control despite macro headwinds thus demonstrating the healthy fundamentals and ability for profit growth. Balanced and strong earnings fundamentals was achieved across all of the top line segments of the group, which resulted in record high gross operating profit for 2023, posting KRW16 Trillion, up 17.8% Y-o-Y.
As a result of efforts to enhance cost efficiency within the group, G&A expenses increased only 0.1% Y-o-Y and the group CIR in 2023 was at record low levels coming in at 41% approximately. However, provisions for credit losses posted at KRW3,146.4 billion last year up significantly Y-o-Y. Due to continuing high interest rates, both at home and abroad, credit risk, especially in the real estate market has expanded substantially. After Taeyoung E&C filed for a debt-restructuring program in December, concerns are running high of deteriorating asset quality in the real estate PF market. To be pre-emptively prepared during the first half of last year through changes in our expected loss modelling, we have set aside KRW490 billion in provisions.
In addition, in the fourth quarter, reflecting a conservative outlook for the future, we have set aside an additional KRW51 billion, approximately and pre-emptively set aside approximately KRW754 billion of additional provisions for priority watch list sectors, including real estate PF and overseas commercial real estate to prepare for any future risk. We expect this to underpin our sustained and strong growth going forward. In terms of returning a profit to society, we have recognized KRW332 billion out of the total of KRW372 billion for social contribution program in Q4. Although last year's, net income did not quite meet the market expectations because of this, excluding such factors, the group's ordinary net income is approximately more than KRW5.5 trillion, which is the highest level of fundamentals found in the industry.
Meanwhile, the credit cost ratio of the group in 2023 posted 67 bps, but excluding one off factors, on a recurring basis, it stands at approximately 40 bps thus being maintained at a stable level. Also, as of the end of 2023, the group's NPL coverage ratio posted 174.5%. In this quarter, the asset quality of priority watch list sectors such as the real estate PF and overseas commercial real estate has been more conservatively rated resulting in a slight fall in the NPL coverage ratio Q-o-Q, despite this however the group still demonstrates the industry's highest level of loss absorbing capacity. Meanwhile, KB Financial Gross BOD today has decided that the per share dividend for 2023 will be KRW3068, up 4% from KRW2950 of the previous year, and also resolved on the share buyback and cancellation of KRW320 billion.
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