Jun-Sup Jung

Jun-Sup Jung asked if the shareholder return target of 42% or more was too conservative given improving capital ratios and whether the company intended to accelerate its 2027 targets. He also requested elaboration on the potential use of capital reduction dividends.

Answer

Group CFO Sang Yung Chun clarified that 42% is a minimum target and the company is committed to accelerating its shareholder return program, particularly via buybacks, given the undervalued PBR. He stated that while the company reviewed capital reduction dividends, it has no current plans to implement them, preferring to observe market developments and potential tax implications for its diverse investor base.

Jun-Sup Jung questioned if the shareholder return target of 42% or more was too conservative given improving capital ratios and asked if there was any intention to accelerate the program. He also requested more details on the potential use of capital reduction dividends.

Answer

Group CFO Sang Yung Chun clarified that 42% is a minimum target and the company is committed to accelerating its shareholder return program, particularly through buybacks, given the currently undervalued PBR. He noted a final decision for H2 would be made later. Regarding capital reduction dividends, he stated there are no current plans as the company is observing market developments and tax considerations, preferring to wait due to the varied benefits for different investor types.

Jung Jun-Sup from NH Investment & Securities asked if the current large-scale quarterly share buybacks would continue and what the group's priority was between share count reduction and PBR targets. He also requested an outlook on credit provisioning.

Answer

An executive clarified that accelerating share cancellation to meet the 2027 target is the top priority, especially while the PBR is below 1x. The pace of buybacks will depend on annual P&L and CET1 ratio. Regarding provisioning, the year-end credit cost ratio (CCR) is expected to be around 45 basis points, with no significant asset quality improvement expected in the short term, though sufficient provisions have been set aside.

Jung Jun-Sup from NH Investment & Securities asked for the full-year loan growth forecast and strategy, and the expected impact of a potential H2 rate cut on the full-year Net Interest Margin (NIM).

Answer

CFO Sang-Hyuk Jung explained that the loan strategy focused on customer growth in H1 and will shift to profitability and asset quality in H2, with overall growth managed within capital limits. Regarding NIM, he anticipates a slight fall in H2 due to expected rate cuts but expects H1 to be relatively flat year-over-year, with a focus on active margin management throughout the year.

Jun-Sup Jung of NH Investment & Securities asked about the surprisingly large Q1 shareholder return, questioning if this front-loading implied a smaller return in the second half. He also inquired about KBFG's stance on impairment dividends. In a follow-up, he asked about potential contingent liabilities and future provisioning needs related to Homeplus and other commercial real estate sectors.

Answer

CFO Sang-Rok Na clarified that the shareholder return principle is unchanged and the Q1 actions were preemptive to ensure market stability, not necessarily reducing H2 returns. He added that KBFG is reviewing impairment dividends but has no detailed policy. An unnamed executive stated that necessary provisions for direct Homeplus exposure were made in Q1, with indirect exposures under review, and that the firm maintains a conservative provisioning approach for all real estate.

Jun-Sup Jung from NH Securities asked about the sensitivity of KB Financial Group's CET1 ratio to external market factors like interest rates and foreign exchange (FX) rates, and whether the company had any specific projections for these impacts.

Answer

The Group CRO stated that the impact from stock market fluctuations is minimal due to small open positions. Regarding foreign exchange, he specified that a KRW 10 fluctuation in the FX rate results in a 1 basis point impact on the CET1 ratio. CFO Jae Kwan Kim added that the group is working to lessen the gap between asset growth and RWA growth to improve capital efficiency.

Jung Jun-Sup from NH Investment & Securities asked if the group's M&A priority has shifted from securities to insurance, requested a progress update on the Korea POS Securities acquisition, and sought clarification on the logic behind the KRW 181 quarterly dividend and any changes to the Total Shareholder Return (TSR) policy.

Answer

An executive explained that there is no change in M&A priority between securities and insurance firms; the group reviews all strong market opportunities. While the Korea POS Securities deal is underway, specific details could not be disclosed. Regarding dividends, the policy of equal quarterly payments based on the prior year's dividend remains. For TSR, the group is considering segmenting its CET1 ratio brackets further to enhance shareholder returns, in line with the government's 'Corporate Value-up Program'.

Jung Jun-Sup of NH Securities asked if the M&A priority has shifted from securities to insurance, requested an update on the Korea POS Securities deal, and questioned the logic behind the KRW 181 quarterly dividend and any changes to the TSR policy.

Answer

An executive clarified there is no change in M&A priority between securities and insurance firms and confirmed the Korea POS Securities deal is in progress. Regarding dividends, the policy of equal quarterly payouts based on the prior year's dividend is unchanged, with KRW 181 planned for Q1-Q3. They also noted plans to refine the Total Shareholder Return (TSR) framework by further segmenting CET1 ratio brackets to align with the government's 'Corporate Value-up Program'.

Jun-Sup Jung from NH Investment & Securities asked if M&A priorities have shifted from securities to insurance, requested an update on the Korea POS Securities deal, and questioned the logic behind the KRW 181 quarterly dividend.

Answer

An executive explained that the Korea POS Securities deal is underway but details cannot be shared. He clarified that M&A priorities have not changed; the group will review any good non-bank opportunities. Regarding the dividend, the policy of equal quarterly payments based on the prior year's dividend is unchanged. For the Total Shareholder Return (TSR) policy, the group is considering segmenting CET1 brackets further to enhance returns under the government's 'Corporate Value-up Program'.

Asked about the company's differentiation strategy for its global business to reach a 25% contribution target, the impact on capital ratios, and details on the shareholder return policy, including whether the KDIC stock purchase is part of next year's return and the target shareholder return ratio.

Answer

An executive stated the global strategy is selective concentration in profitable markets, which is not expected to significantly impact capital ratios. Regarding shareholder return, the KDIC share acquisition might replace a planned treasury buyback, but it's not finalized. The total shareholder return (TSR) target is expected to be around 30%, with further options considered if a capital buffer is available.