KB Financial Group Inc. (NYSE:KB) Q3 2023 Earnings Conference Call October 24, 2023 3:00 AM ET
Company Participants
Peter Kweon - Head of Investor Relations
Scott YH Seo - Group Chief Financial Officer and Senior Executive Vice President
Oh Byung Joo - Managing Director, KB Financial Group Inc
Conference Call Participants
Jeong Tae Joon - Yuanta Securities
Kim Do-ha - Hanwha Securities
Cho Jihyun - JPMorgan
Park Sinyoung - Goldman Sachs
Peter Kweon
Greetings. I am Peter Kweon, the Head of IR at KBFG. We will now begin the 2023 Q3 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 Scott YH Seo, as well as other members from our Group management. We will first hear the 2023 Q3 major financial highlights from CFO and SEVP Scott YH Seo and then have a Q&A session.
I would like to invite our SEVP to deliver our 2023 Q3 earnings results.
Scott YH Seo
Good afternoon. I am Scott YH Seo, CFO of KB Financial Group. Thank you for joining KBFG's third quarter 2023 earnings presentation.
Allow me to first walk through key performance metrics as of cumulative Q3 2023 before going into the details on business performance. KBFG's third quarter ‘23 cumulative net profit was KRW4,370.4 billion, up 8.2% year-over-year. Despite difficult internal and external operational backdrop supported by balanced banking and non-banking subsidiary growth and widening of non-interest revenue and G&A control group's earnings capacity is currently well sustained.
Just to note, IFRS 17 has been retroactively applied to our 2022 earnings. Also, cumulative ROE this year was 11.7%, sustaining improvement following last year. Annualized EPS, earnings per share reported approximately KRW14,691, up 8.3% year-over-year with the impact of treasury share buyback and cancellation coming through.
In Q3, net profit reported KRW1,373.7 billion, sound interest income growth and continuing cost savings efforts drove earnings in line with market consensus and even based on retroactive treatment of IFRS 17, there was increase in earnings year-over-year. However, due to greater financial market volatilities and sizable reduction in other operating income, as well as one-off losses arising from insurance subsidiaries’ use of the actuarial assumption guideline of the supervisors, net profit was down 8.4% Q-on-Q.
Next, credit cost on a cumulative basis for the Group in Q3 was 52 basis points, reporting a wide year-over-year expansion. This is because on top of general provisioning during the first quarter, there was no overlay provisioning during Q2 following changes in the expected loss model, which amounted to KRW490 billion of large-scale provisioning in the first-half of the year, which was a continuation of conservative and preemptive provisioning stance against economic uncertainties at the Group level. We believe such provisioning policy will eventually have a positive impact on mitigating possible economic shock in the future and sustaining a stable net profit generation at the Group level.