KB Financial Group’s net profit for the first quarter of this year came in at an impressive 870.1 billion won, up 59.7 percent year-on-year.
The stellar performance was driven by higher interest income and fee and commission income, according to the group.
The groups’ net interest income for the same time period increased 14.6 percent year-on-year, driven by increased average loan balance and NIM improvement, but slightly declined quarter-on-quarter despite the pick-up in NIM due to less operating days compared to previous quarter.
KB Financial Group’s net fee and commission income for the first quarter of the year is up 41.4 percent year-on-year, attributable to the consolidation of former Hyundai Securities, and up 9.2 percent quarter-on-quarter, largely due to higher trust income from the bank.
The group’s “other” operating profit significantly improved due to absence of non-recurring losses from previous quarters, and increased gains on securities and derivatives from the bank and the securities subsidiary.
The gross operating income for the same time period was 2,308.9 billion won, due to the group’s effort to improve core income by strengthening non-banking business as well as continued NIM improvement. KB G&A expenses increased 10.8 percent year-on-year attributable to the consolidation effect of Hyundai Securities, but slightly declined when excluding the consolidation effect.
Meanwhile, “provisions for credit losses” increased slightly quarter-on-quarter, due to the base effect from write-backs in the last quarter of 2016 and provisioning for DSME.
Chairman Yoon Jong-kyoo plans to lead the group to recapture its position as a top financial group in Korea. During a recent media meeting, the chairman said the group lost its top position as a leading financial group to Shinhan Financial Group in 2010. Prior to that, KB Financial Group held the top position since its incorporation in September 2008, and the chairman intends to regain the coveted position.
As a sign of his leadership, the group logged a net profit of 870.1 billion won in the first quarter this year, the largest net profit since the group was launched in 2008. Since the chairman’s arrival, the group has taken over a number of financial firms, including LIG Non-Life Insurance Co. and Hyundai Securities under the chairman’s initiatives. He also expanded the operational network of Kookmin Bank which helped to generate a large net profit for the bank, but fell short of matching those of Shinhan Bank, amounting to 997.1 billion won.
Chairman Yoon pointed out the steady effort to tighten the management of the group and its affiliates, including Kookmin Bank, for sustainable growth as the main cause for posting the large Q1 net profit.
The financial group’s rejuvenation has been owed to the successful turn-around of Kookmin Bank’s normal operation as a result of removing bottlenecks in its operation, including ineffective personnel assignment and incomplete delivery of financial services, freeing the group to pursue its normal operation. The bank has been able to pick up where it left off, which is to expand the number of hub branches and make efforts to create synergy among its affiliates, the chairman said.
The bank dismissed 1,100 employees in 2015 and an additional 2,800 employees last year through honorary retirement plans. Yoon also held talks with a number of well-known IT firms including Google and Amazon in connection with the digitalization of the affiliates operations. He also has a plan to expand the group’s overseas operations centered around Southeast Asia.
KB Financial Group Inc., incorporated on Oct. 29, 2008, is a financial holding company in Korea. The company's operations include Kookmin Bank, a commercial bank in Korea. The company's subsidiaries engage in a range of businesses, including commercial banking, credit cards, asset management, life insurance, capital markets activities and international banking.
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