KB Financial logs record profit in Q2, above consensus estimates

South Korea’s second-largest financial institution KB Financial Group Inc. achieved record-high quarterly net profit in the April-June period of this year, outperforming consensus estimates.

KB Financial posted 1.5 trillion won ($1.2 billion) in second-quarter net profit, up 23.9% on-year and similar to the first-quarter performance, according to its financial results released on Tuesday. Outperforming analyst estimates by 12.1%, it is the group’s largest net profit on a quarterly basis.

The group’s second-quarter performance was driven by growing income from interest and fees. Net interest income for the second quarter reached 3 trillion won, up 6.7% from the first quarter of the year. The net interest margin, an important indicator of profitability, slightly rose to 2.1% from 2.04% the previous quarter.

The fee income in the second quarter amounted to 914 billion won, up 4.1% from the previous quarter, thanks to increase in stock trading and acquisition financing.

Other operating income, which includes revenue from operations that are not related to the group’s principal activities, dropped 43.6% from the previous quarter to 372.5 billion won. The decline came as treasury bond prices fell due to high interest rates, KB Financial said.

The group achieved a 3 trillion won net profit in the first half of the year, a record high on a half-year basis. The profit from January to June jumped 12.2% from the same period last year.

AFFILIATES' PERFORMANCE

The group’s major affiliate Kookmin Bank posted 927 billion won in second-quarter net profit, down 0.5% from the previous quarter. The bank’s net interest income reached 2.5 trillion won, up 4.9% from the first quarter thanks to increased lending and net interest margin. It logged 76.7 billion won in other operating losses due to a shortfall in fixed-income management.

The bank achieved 1.9 trillion won net profit between January and June, up 7.7% from the year previous.

KB Insurance Co. posted 271.4 billion won in the quarterly net profit, up 6.9% from the first quarter thanks to an improved loss ratio. The non-life insurance unit logged 525.2 billion won net profit in the first half, topping the group’s non-bank affiliates.

Credit card unit KB Kookmin Card Corp. posted 110.9 billion won in net profit, up 35.2% from the previous quarter.

Investment banking unit KB Securities Co. reported 109 billion won in second-quarter net profit, dropping 22.5% from the first quarter due to a decline in fixed-income profit. The brokerage house’s first-half-year net profit reached 249.6 billion won, jumping 37.1% from the same period last year.

The group held a board meeting on Tuesday and announced its plan to repurchase shares worth 300 billion won. It is the financial institution’s second decision on stakeholder remuneration this year, following 300 billion won worth of buybacks in February.

Write to Bo-Hyung Kim at kph21c@hankyung.com

Jihyun Kim edited this article.