KB Financial Group Inc. (KB) Q1 2022 Earnings Call Transcript

For the period ending March 31, 2022

April 22, 2022 3:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Peter Kweon

Good afternoon. My name is Peter Kweon, the Head of IR at KB Financial Group. We will now begin the 2022 first quarter business results presentation. I’d like to express my deepest gratitude to everyone for participating today.

We have here with us our group CFO and Senior Managing Director, Scott Y. H. Seo, as well as other members from our group management. We will first hear the 2022 first quarter major financial highlights from CFO and Senior Managing Director, Scott Y. H. Seo, and then have a Q&A session.

I would like to invite our Senior Managing Director to deliver our 2022 first quarter earnings results.

Scott Y. H. Seo

Good afternoon. I am Scott Y. H. Seo, CFO of KB Financial Group. Thank you for joining KBFG’s Q1 ‘22 earnings presentation.

Before moving on to earnings results, I will first run through key business highlights for KBFG for Q1 2022. First, Q1 ‘22 net profit based on profit attributable to controlling interest was up 14% year-over-year to KRW 1.45 trillion, outperforming market consensus by 13%. Annualized EPS was KRW 14,892, up 14% on year, while ROCE came in at 13.2%, improving 0.7 percentage points year-over-year. Q1 profit, net of one-off factors on a recurring basis was up 4% year-over-year, which shows KB Financial Group’s robust earnings capacity despite market uncertainties and lower trading and retail commissions income following the rate hike.

Second, despite declines in household loan balance, thanks to market dynamics on rate hikes, there has been strong demand for SMEs and CIB lending. And as a result, group’s loan in won was up 9.7% year-over-year.

Despite strong corporate demand and weak capital markets and quarterly dividend payout, 2021 end of Q1 CET1 ratio was 13.4%, on par with year 2021 level, and Tier 1 BIS ratio compared to end of last year was up by 14 to 23 basis points. KBFG is proud to say that it has the industry’s best capital adequacy ratio.

Third, nominal credit cost for the group in Q1 ‘22 was around 15 basis points, but credit cost on a running basis, after considering for write-backs, was 23 basis points, as we maintain conservative provisioning stance above the average of 3-year period before the pandemic. Also, NPL coverage ratio in Q1 ‘22 was 218%, up 71 percentage points versus before the pandemic. And NPL coverage ratio had been uptrending for the past 4 consecutive quarters.