KB Financial Group Inc. Q4 FY2025 earnings call

• Key highlights: 2025 net profit was KRW 5.8 trillion, a 15.1% increase Y-o-Y. Year-end cash dividend was KRW 1,605 per share, total KRW 575.5 billion, total cash dividend KRW 1,580 billion, +32% Y-o-Y. ROE was 10.86%, +1.1 ppts Y-o-Y. Basic EPS was KRW 15,437, +20% Y-o-Y.
• Business results: Net interest income grew due to growth in loan assets and reduced funding costs via core deposits. Noninterest income expanded driven by capital markets. Cost efficiency efforts led to CIR at an all-time low. Capital adequacy maintained at high levels with CET1 ratio at 13.79% as of year-end.

In 2025, the group's net interest income amounted to KRW 13,073.1 billion, increasing slightly by 1.9% Y-o-Y. Noninterest income was KRW 4,872.1 billion, expanding sharply by 16% Y-o-Y. Net fee income was KRW 4,098.3 billion, increasing by 6.5% Y-o-Y. Other operating income was KRW 773.8 billion, increasing by approximately 120% Y-o-Y but weak in Q4. SG&A expenses totaled KRW 7,051 billion, increasing by only 1.6% Y-o-Y with CIR at 39.3%, an all-time low. The credit loss provision amounted to KRW 2,318.7 billion, increasing by 15.6% Y-o-Y, with credit cost at 48 bps. As of year-end 2025, the group's BIS ratio was 16.16% and the CET1 ratio was 13.79%.

• NIM expected to gradually decline in 2026. Loan growth: household loans expected to be ~2-3%, corporate loans ~6-7%. SG&A expected to grow ~4% Y-o-Y, excluding education tax increase, ~2% growth. CET1 ratio expected to have slight decline but upward trajectory in Q3.

• External uncertainties in financial market, exchange rates, and interest rates. Asset quality pressures. Penalty provisions related to ELS (Equity Linked Savings) and LTV (Loan-to-Value).

Q: Reason for large year-end dividend and 2 rounds of share buyback?

A: One reason was deferred earnings from initial shareholder return announcements. Another was government policies revitalizing the capital market, PBR improvement, and share price rise. For share buyback, 2 rounds were done for direct acquisition within 3 months.

Q: ROE target and overseas business impact?

A: Mid-term ROE target is >11%. Overseas business improvement, like from KBI or other overseas entities, helps in enhancing ROE.

Q: Shareholder return scope and dividend policy details?

A: Flexible shareholder return policy. Separate taxation on dividend income and capital reduction dividend are in preparation.

Q: Provisioning for ELS/LTV and 2026 dividend?

A: Provisioning for LTV was KRW 69.7 billion and for ELS penalty was KRW 263.3 billion. There is potential for year-end dividend increase in 2026 due to flexible dividend policy.