Chairman Yoon Jong-kyoo of KB Financial Group.

KB Financial Group continues to do well as its third quarter profit is projected to hit 500 billion won, building upon its solid first half 1.125 trillion won profit, up 19.1 percent year-on-year.

The group’s overall performance so far this year has been excellent, despite low interest rates and a slowing economy, owning to tight management and the fact that its affiliates are firing on all cylinders, including banking, insurance, securities and credit cards. The balance sheet and capital conditions of country’s top financial group have been improving and are well secured against losses, said Han Jung-tae, an analyst at Hana Financial Investment, adding that he expects the group to post 488.2 billion won in net profit in the third quarter ending Sept. 30. The financial group’s core units that include banking, insurance, securities, credit cards and capital investment, have reportedly all performed well, while upper management ensured internal stability, market observers say.

The group is also scheduled to exchange its shares with Hyundai Securities Co. as part of the process to incorporate the brokerage house as a fully-owned subsidiary. That will take place before a planned merger with its subsidiary KB Investment & Securities Co. in the fourth quarter this year. In August, the financial conglomerate announced that it would swap stocks with Hyundai Securities and buy back treasury stocks worth 500 billion won from KB Financial Group’s shareholders to prevent the dilution of shareholder value when the new KB Financial shares are listed on the stock exchange.

KB Financial Group decided to launch the stock exchange program before merging Hyundai Securities and KB Investment & Securities to earn confidence from minority shareholders. The firm concluded it would be more desirable to set a stock exchange ratio based on the market price. The conglomerate acquired a 29.62 percent stake in Hyundai Securities in April and it will take over the remaining 70.38 percent stake on Oct. 19 by exchanging its stocks with the brokerage’s shares in a 1:1907312 ratio.

The financial enterprise’s capital will be increased by 158.8 billion won after the stock swap program and the number of its shares will go up by 8.22 percent, while all profits earned by Hyundai Securities will be reflected in KB Financial Group’s financial statement. The acquisition of the brokerage firm is expected to add about 100 billion won profit when its previous performance is considered, market observers say.

KB Financial Group shares closed Sept. 28 at 38,200 won, down 450 won or 1.16 percent from the previous session.

 Despite the challenges in the overall environment, KB Financial Group managed to realize stable top-line growth. 

“We also nimbly responded to credit events with preempted provisioning and continued our efforts to become more cost efficient including additional ERP programs. This is overall a part of our efforts to improve the profitability of our overall business,” they said. 

 “Also as of May 31, PPA [ph], a new member of the KB Financial Group family, and with Hyundai Securities, we will be able to reinforce our non-bank portfolio. In the future we will focus on maximizing synergies among subsidiaries, such as banks, securities and insurance companies, and continue to exert efforts to steadily improve KB Group's profitability.”

A view of the KB Financial Group building in Yeouido, Seoul.(Photos: KB Financial)