KB Financial Group announced its business results for the third quarter of 2024 along with its “Sustainable Value-up Plan” via internet and mobile live streaming on Oct. 24.
Prior to the earnings announcement, KB Financial Group’s Board of Directors resolved KB’s Sustainable Value-up Plan, which includes a shareholder return plan in line with a CET1 ratio, along with a plan to strengthen its fundamental profit generation power.
KB Chairman Yang Jong-hee personally announced it.
KB Financial Group plans to return surplus capital in excess of a CET1 ratio of 13 percent to shareholders beginning from next year. The company said it will maintain the highest total shareholder return ratio in the industry.
Specifically, surplus capital exceeding a CET1 ratio of 13 percent at the end of 2024 will be used to finance the first shareholder returns in 2025, and surplus capital exceeding 13.5 percent for the whole year of 2025 will be utilized to finance the buyback and cancellation of treasury shares in the second half of this year. Its shareholder return system linked to CET1 ratios will follow those of global financial giants such as JPMorgan.
The higher a CET1 ratio, the higher a total shareholder return.
In order to boost its corporate value, KB Financial Group proposed targets of the industry’s highest total shareholder return rate linked to CET1 ratios based on ROEs of 10 percent or more and a CET1 ratio of 13 percent or more in light of profitability, soundness and returns to shareholders.
While declaring a shift in the frame of shareholder returns with value per share growth, KB Financial Group proposed targets of 10 percent average annual EPS growth and the buyback and retirement of more than 10 million treasury shares.
For capital ratio management, the financial group revealed a return on risk weighted assets (RoRWA)-centered profitability enhancement plan and a specific direction to manage RWA growth below the average of the past 10 years (6.1 percent) to maintain its CET1 ratio at the mid-13 percent annual range annually.
“KB Financial Group prepared this value up disclosure with the philosophy that true shareholder value enhancement can only be realized when measures to increase intrinsic corporate value are linked to shareholder return, rather than simply competing for a total return target. We hope that KB’s sustainable and predictable shareholder return framework will become a standard for financial companies in Korea.”
Meanwhile, KB Financial Group’s cumulative net income in the first three quarters of 2024 was 4,395.3 billion won, up 0.4 percent year on year, driven by strong performance of non-banking affiliates and prudential management efforts in a tough business environment, including a lower NIM due to a declining market interest rate and a slumping economy.
Its net income for the third quarter decreased 6.8 percent quarter on quarter to 1,614 billion won, due to a 13-basis point quarter-on-quarter decline in its NIM despite a 7.9 percent increase in non-interest income and the underlying effects of a one-time gain in the second quarter.
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