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KB Financial (KB)

Participants
Scott Seo CFO
Jin-Sang Kim Hyundai Securities
Jaewoo Kim Samsung Securities
Do Ha Kim Hanwha Investment
Lee Byung Gun DB Securities
Yafei Tian Citigroup Inc.
Call transcript
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Operator

0:02 Greetings. I'm Peter Kweon, the head of IR at KBFG.

We will now begin the 2021 Yearly Business Results Presentation. I would like to express my deepest gratitude to everyone for participating today.

We have here with us our group CFO and Senior Managing Director, Scott Seo as well as other members from our group management.

the Managing financial then Directors Q&A hear CFO from have first session. Senior and Scott will XXXX highlights major our a We Seo and to Senior like Director invite would XXXX our I and results. to CFO deliver our earnings Managing

Scott Seo

Scott I KBFG Group. joining CFO at and full-year XXXX X:XX Thank am KB all you Good Seo afternoon presentation. for QX Financial earnings release

key on highlights. allow run me presenting to performance the business through XXXX Before first

profit, market, an gained driving merely rate income a posted loan growth, earnings in XX% backdrop used commissions and stronger as of well income, booming growth to to and interest growth Cambodia recovery, clear ROE was sign including core improvement. interest First, of but growth COVID the X net solid XXXX by EPS a notched better however non-Bank on hikes meeting up a testament to economy M&A In achieving XX% market as trillion is risen points X.X net rates up to in income, IB, year driven improvement earnings from Prudential the showing X:XX recovery. the controlling This pandemic, be not WM the outcome competitiveness has share level insurance Won, and capacity. back of year a percentage X.X% which earnings up was on basis and which last interest Also of stock on high KRWXX,XXX, economic was profit consensus. global X.X to Contribution is posted year-over-year, acquisitions by market XX% Life impact Diluted up Driven and XX.X%, XXXX. middle X:XX export of Korean a record Indonesia. XX%.

up XX is experienced conservative bring the X:XX Third, stands payout around market and XXXX support. as note the forbearance net XX levels market the the was percentage real ratio the XXXX as and credit this three to today's point, of group's XX% lower market took pre-COVID outcome concerns achieved were to for liquidity level. softening on digit double average X:XX All rate of since the X.X ratio decline COVID-XX back of income even fixed point NPL interest costs pre-COVID which voluntarily. estate an points years. equities, and was and provisioning is in in under levels FYXXXX preceding XX% coverage basis the Group's times at well regarding pre-COVID midst debt Also after quality on asset the provisioning government and led the hikes, of to was to from household DOD versus growth XXX%, ratio the back during the XXXX we ROE profit pre-emptive pandemic. Second were set payout able that temporary asset of

is equivalent that of the higher was full XX% August, This X.X% In supported XXXX, paid part DPS [Indiscernible] the and profit. got value share profit up solution terms midst including policy was This dividend revenue by X:XX to also by to in decision shareholder difficult out COVID-XX commitment shares. in brought year-over-year. year amounts worth DOD our of of payout interim for normalization was a XX billion cancel on of KRWXXX enhance treasury per pandemic. of There of to DPS net net of XXX to

me Lastly, return options on what advanced global up We it a and for our wide digitalization provide raise shareholder must X:XX policy we let more to standard. ranging efforts. update an explore will continue to the do to

around our net business billion, capacity. KRWX.X profit growth increase securities, KRWX.X contribution life capabilities, Group's profit billion all improving decline expanded hence improvements. of billion rise was But loan income, income. M&A up large one earnings KRWXXX the group impact I XX.X% goose well our and There results which platform through as on Meanwhile, a connect platform and launched to X:XX was XXXX a NIM Liiv Group's profit and between commissions to of vein, income my In was rise commissions of and competitiveness core group's we X:XX strategies. year super billion continuous details of bank was bank's September affiliate interest as the the content points sizable card detail. interest launched improvement better of consumption a around seen well X:XX dive fees through X,XXX.X to data trust solid or will recovery up net loan seasonality. ERP solid income provisioning as by core will information platform, lead growth Non-bank strong company, which the and be as triggering Cambodians is basis same credit fee bank I M&A. the sizeable is a net and driving in basis two as further will financial credit knowhow of of was in profits fiercer growth QX subsidiaries, trust to fully this and of KB income improvement. KRW the comprehensive attesting pre-emptive XX,XXX.X is card incumbents. Last were up interest for banks in XX.X%. financial interest This business XX% and hub expense insurance analytics financial group. inorganic app Nonetheless, through financial drove number X:XX net was profit also to KBFG writing competitiveness fees income the driving billion, XX.X% and or tech XXX.X we robust which the This Over initiate, from able for run a service earnings Q-on-Q, Gen market billion, up to ensure year-over-year KRWX,XXX.X, income, XX.X% Q-on-Q. net prospect IB the to net equities interest and X.X% we into underpinned KRWXXX X.X% KRW KRWX,XXX.X result competitiveness income critical and platform and of Q-on-Q each XX by as expert the uptrend, ourselves full we bold will securities bottom course versus future. more and year-over-year Asset business. to KBFG’s net XXXX year, via meaningful the back As competition X:XX level items Page product due going drove the bank, a year-over-year. performance in big continuing QX driven seen store the to versus have are we up redefine a recurring now platform Next NIM of which one customers, through of a year, to can while improvement Next, growth KRW non-financial on potential and data XXXX. bank a quarter, were Z's customers right XXXX versus around utilize This now new item. the as three graph financial on number valuable capacity of the recovery, and XXXX trillion, and banking, of increases subsidiaries, financial to undertook in sustaining trillion Management group. which efforts from growth financial million including in XXXX QX performance one due the fee one-off a enhanced net improve income income sales

mainly in came generating On brokerage KRWX we But capacity Commission's Q-on- marginal commissions notched the level, groups group business annual Q income, that seasonal improved KRWXXX.X, other of fee hand, QX endorses trillion from compared net and income up income on to back at XXXX, to squeeze securities mid the fees such income. declined and on fee of which around KRWX X:XX IB. level in trillion in a

leading other outcome which to was Next X:XX due improvement market was KRWX,XXX.X G&A or ERP profit, spooking billion other QX income, [Indiscernible] $X of and to Life, operating other Cambodia's year-over-year, which high promotion which from operating driving profit bank of Prudential increase. higher M&A from G&A. wave X.X% trading approximately Q-on-Q market Apart lower the and seasonal the KRWXXX.X of billion performance. XX securities earnings and on was KRWXXX.X and adding headcount seasonal by rate KRWXXX value QXXX expenses a other mark, for billion volatilities Life FX tangible cold equities reporting on insurance of factors and provision and the billion. But interest operating down efforts believe up XXX on such rate balance Prudential profit ratio, year-over-year. financial mainly G&A for billion making grew Group acquisition in securities is XX:XX related X:XX index, of rising Next KRW business Next improvement was Also all higher wide of rate, to PCL cost was up earnings KRW to added is like Group’s QX on X.X% acquisition accidents is and gradual result. significant exchange loss on management KB XX:XX a erosion prospects, efficiencies. squeezed we underwriting COVID G&A only KRWX,XXX.X, Indonesia impacted expense year-over-year. year, by losses. the insurance impact, impacted billion constraining factors and XXX terms was its there led with snowfall derivatives KRWXXX other back credit operating up of drove of and Group’s was expenses. and heavy insurance, QX which

of impact, loans COVID-XX size we additional given XX:XX up of around related conservative As reclassifying economic Large know, provisioning you KRWXXX for there KRW during the XXX believe last against to year, to off part has forecast usual fully set place which one to additional COVID-XX yet of times such to uncertainties. fourth was us certain Q-on-Q. scenarios used made due quarter, provisioning. top which and pre-emptive we additional To billion quarterly related the we've prepare provisions, COVID-XX pre-emptive KRWXXX.X XXXX QX three As uncertainties risk on provisioning led amounting rise management. buffer billion aside of ample to took

‘XX X, XXXX beginning sustaining on XX% KBFG’s Page year-to-date of and X.X% was sources, XX:XX score denominated consecutive and basis Next quarterly on For X.X% XX core credit conservative earnings fundamentals to growth since in provision trillion is provisioning level of probability steady by one was billion, model up cost the meaningfully notched loan KRWXXX the in X.X% one growth solid retail reported XX is X,XXX.X a driven first to decided XXXX XX:XX card revisions event and with Also versus basis banks. of there model, as in for Group's KRWX,XX.X above QX. the new additional basis of up there level billion diversified for was indicators. basis underpinned PCL two in level earnings following learned and actual of compliance profitability. end full the XX in and is point year. provisioning of with financial upgrade credit KRWXXX required a XX.XX% KRW reported default Banks Next by III the fair in of year-to-date. years. key [Indiscernible] PD XX:XX point credit is take growth in approach of we end. cost revenue of FYXX ROE trillion, orally gross on year points, the with loans was demand, line KRWXX the of credit applied recurring Basel was accordingly September business

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funding in of center YoY XXXX and portfolio widened interest hand, basis it income the the of by with improved following and back group's lighter let management other the expansion. banks the case on NIM, annualized and group growth, spread profit deposit X effect burden the the On profitability of core points the

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So to release concludes Group KB I you as earnings XXXX please will thank them for Financial listening. refer presentation because needed

Operator

internet. us give Q&A please very of joining moment us via Instructions] XX:XX those to contact the We screen. refer begin of now questions. wait we the will info a the the [Operator you for Please presentation for as last the on page

Please from Mr. Hyundai the ahead. will Securities. take We Motors question go Sang from Jin Kim

Jin-Sang Kim

Good questions. results. XX:XX two ask afternoon. you like I Thank to you for would good

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Scott Seo

for question. very XX:XX much Thank you that

one question, overall and also and also of third, that then say I the Year. is DPS, and management. senior about share the capital answer forward. talk Would on our strong of much Management to Based KB question, capital, Director to shareholder from moment. XX:XX our to strength, there first Bank part And directors buybacks. CFO Happy So as want including from adopt give return you regards [Indiscernible] Just to fundamentals. for Kim and [Indiscernible] very second EVP, would Managing cancellation the based KB New strong a insurance I'm question. on operational me that like backdrop question Commission's also us There's ratio there's your Securities KB our our let and going on trudging and capital respond also Thank payout to hello, we say income more question. and we go invite with share Capital advanced and to our policy, managing

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We thinking many return that different so up could boost level. are of we shareholder total further options,

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Unidentified Company Representative

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A –Unidentified Company Representative

XX:XX Hello, securities. KB I am [Indiscernible] from

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Unidentified Company Representative

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Unidentified Company Representative

XX:XX Yes. Good I afternoon, am [Indiscernible].

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Operator

XX:XX Thank you for the very detailed answers.

Jaewoo we From the Samsung on Please sir. Securities, will We take Mr. Kim line. next have the question.

Jaewoo Kim

XX:XX have you I'm for I Thank Samsung from questions. Kim Securities. Jaewoo two question. your

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Unidentified Company Representative

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Unidentified Company Representative

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Operator

for XX:XX you your much answer. very Thank

move Kim. will Please Securities, Hanwha question Ha We Do ahead. next the go from on to take Investment

Do Ha Kim

compared Life. your year was Hanwha uptrend Kim that the due from to and cycle I question Prudential fast. I quite not was XX:XX difference. relates increase as to in margin Hello, Investment steep. on one banks it's Do other margin in But to have and was am If peers Last increase Ha question not Securities. QX an the your QX QX,

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Unidentified Company Representative

net-interest Yes, XX:XX regarding margin, the the margin.

the if of is sheet the and rate bank, previously the add to you loan repricing into the asset, consideration to we emphasize like that thing they cycle, the or cycle, also at that analysis balance is and conducted sensitive cycle I one funding if the the want look based would NIM to but are rate to take policy CFO looking X as hike basis CFO, the bank be the that are point, we as points to a QX, go I further. we basis going if assume then there's So moves in at today, up Second has we rate of mentioned, points to have, net-interest policy larger by to margin X increase. we margin, think If side. you think that hike on have quicker and the a if has XX:XX room also currently

the the compared bank the So because free basis the this competitors, the interest absolute of on with is aspect. do margin the free to of funds, net contribution KB this interest KBFG has and interest bigger to or

also shareholder deposits the big peers. low KBFG loss is of the equity, deposit, and the coverage demand compared and and total franchise, it's reserves, for to the has outstanding big, out size So size is

the going XX:XX overall profile. be NIM. the impact you So makes rate to then that to of absolute interest contribution know, up, As on goes level there's NIM bigger also if a

So then more KBFG, think quicker or to contribution, is higher policy is actually could the that that's improvement moves forecast, our funds my view than be therefore because compared if free personal interest NIM my view the for up goes rate we bigger peers. KPFG

strategy. of terms In

we fee as accordingly, variable are in going loans hikes, to further Prudential and our to level will peers, you appropriate we margin capabilities that rate of our terms also sure margin. question expand the on our respond will interest so well and be of XX:XX the we as grow back very policies mixed through the interest in the you. [Indiscernible] more secured to of compared to Life, make we NIM regulatory exposures. And the IR we our For rate to our call. changing that Regarding the we will in endeavor and after your environment expand will flexible come team interest one Thank

Operator

next XX:XX is Security's Lee question team The next We leader. the Gun will take from Byung question. DB

Lee Byung Gun

to Lee would a ask Security. Byung you DB I question Thank like Greetings. much Gun detailed if XX:XX very for I answers. am detailed possible. your more from

growth. growth seeing For we are KB, stable for know very you that

concern. I for there So think cause don't is

seems that loan to world. it the is compared past was However, your at what in past the in looking the there at media, trends, change in the in January looking a reported

you contribute bank to your quarterly strategies? for loan NIM. XX:XX so after be some about it there seems at is is growth can environment maybe Looking that that household and changing so cause market [Indiscernible] concern. seems your the It the might thoughts us decreased For about down? question trends, the them the that sunset, think and XXXX has abortion breaking Second or rooms of the I tell

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Unidentified Company Representative

and XX:XX household for our and to loan loans questions, then looking at corporate for first the answer January. I goal points would and for loans, your data like in

those implications. For

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Lee Byung Gun

more there we the we because the with in for regulations. some will the with of July, from But people the I more am it's in bank because household In believe [Indiscernible] be for seasonal of the effect, Jeonse going moving loans in February see guarantee increase XX:XX January. loans bonuses. of loans. have demand down we a determination will Jeonse And

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Unidentified Company Representative

would XX:XX answer the And to [Indiscernible]. from like I question

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out expecting interest If happen additional keep and three-year a will basis. two hike interest Some there others the people we too will started year. eye close then four that are to already are the two change will we hikes will first about we But are take and expensive, trend a dated we out we bonds, are three-year XX:XX discussion our they be saying – two this very bond in to we it think presentation. or regarding surely almost hour the in been has a what one rate bonds. to of half give then on will will rate on and industry, having fruitful them I since

So we for will wait further questions.

have IR you and please this If time, our any don't with at we answer. department further a detailed questions will provide you contact

will Citi Yafei Securities, from Tian. We question take next the

Yafei Tian

questions. taking have XX:XX Hi, my thank questions. I quick for you two

is Hello, hear can one is you first buyback. question The second [Technical on IP really The me? Difficulty] the on expenses?

Unidentified Company Representative

[Foreign Language]. XX:XX

Operator

XX:XX you Yafei? No, second think I you've disconnected. question your repeat Can

Yafei Tian

yeah. yeah, Yeah, XX:XX

investment spending question is [Technical Difficulty] pressure. time second technology The on the

Thank to [Indiscernible] how report understand these much to wanted spending additional just So initiatives you. needs all

Unidentified Company Representative

XX:XX Yes. Give us one moment.

for We moment. just the to will you Thank back answers come one question. the you with

on our previously, share list. always Regarding buyback as is buyback we mentioned

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Regarding your stock the IT said QX IT prices. on to banks that question some that investment second and US released negative due and their and spending. cost earnings technology, The impacted

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growth, ratio difficult in investment, to our is to line including conservative. spend, in continue direction IT basically very mind. basis investment be we take achieve on a is of with it's top and GNA that basis on for will share growth we Although on to basically approach the our us we income bold going to numbers, trend upon That you to the spending, for and will specific the recurring a group the revenue aggressive All decide have compared downward XXXX. is all, cost we order show ’XX will sustainable to spending, which in in

If IR this you please specific or contact team. IT details technology more spending, need regarding our

Operator

answer. very you for that Thank much XX:XX

last think from JPMorgan. question this our I will become

to [Indiscernible] the have on We line.

Unidentified Analyst

you very XX:XX quarter. for Thank much this your the a I for question for provisioning opportunity. have simple

because macro were processes sufficiently looking that thought they quite at they reflected. I think others, were and well you conservative, I, I conservative the were and

So but changed. your actually it seems was that macro view

you So us the have for that, COVID-XX you give And assumptions the changes some you BASIL and us can others model us you can conservativeness? can tell mentioned? your extent or about macro? about give default program much for COVID-XX give can you'll the greatly be of your breakdown and and you of how you and a So NPL, about think So numbers, the us be it some do the of amount forbearance will if appreciated. deferral covered III

Unidentified Company Representative

answer. of a our [Indiscernible] more give XX:XX Financial KB a detailed big risk give head will picture I Group and will

that – in COVID-XX was was cost before credit a at I looking average XX XXXX and presentation, the my bps XX, During credit forementioned it bps. was costs have XX bps bps and our XX it outbreak,

bps. are that our to and payout market there as and earnings shareholder we have So, going And on aware our higher fully give we dividend ultimately concerns improve focus shareholders, we value. aforementioned are our have and increase return to and to are to

planned we this XX we So, provisioning bigger our from XXXX, perspective to have past the planning, picture during a and pre-emptive on pre-emptively have in years. have in

calculations taken risk into the see that we can You assumption. highest for our have

thank our of Group, Financial will head floor risk give you. [Indiscernible] the I to KP So

Unidentified Company Representative

mentioned an on a conservative. would to XX:XX [Indiscernible] will on be the We and assumptions, FLC for provisioning risk policy explain I for pre-emptive for wide and like group overall policy and they basis. basis

have we with that So this continued trend year. and

Looking at risks we there's and quite that our still be solvency Omni conservative, are capacity, others will also and linger.

well, looking financial and XX XXXX very we looking Asian at be the financial the the years’ provisioning, looking crisis GDP and others, will dire our quite programs. COVID estate at and other mentioned assumption asked real forbearance detail those you financial very growth situation numbers numbers, we some numbers numbers serious and XX situation took in crisis. with at the looking past at conservative, by CFO a into And about past a time about So as

So be to it is planned in March. terminated

interest pay And will will be very them will deferral believe they a and up there be for important normally billion borrower for principal just point. back. So that payment that divide we KRWXXX it about stay can to those voluntarily, and the

for repay will earlier than But So hard is So for KRWXXX quality, that said say asset there at the will is expected. borrowers looking that it's whether they their are they to XX:XX defer borrowers or not. amount.

and So KRWXXX that than delinquency amount, less about KRWXXX about it's X%. looking so or is billion LP at rate, their

that XX% is among secured. So

the might of among with have hikes household quality a the risk companies we well very pay multiple if delinquent repayment borrowers, problem is billion, loans. for additional then turned in that the quality companies, hikes, it's forbearance So those the And borrowers. losses. program will interest believe and looking XX:XX for back a we KRWXXX risk. And the are another at point in for with not for currently, for COVID-XX those a rate the rate capacity is greatest collateral, we at it believe to their other, interest have then March, deteriorate are the if and the might that not if that they then even might the with determination that asset household And the borrowers, interested asset they the there with possibility borrowers the be we managing add

and borrowers, likewise. multiple five for enough we household see lower then situations that to those rates, credit we DSR, if those for for So, or believe have provisioned we with of borrowers high the prepare well with rating

on possibility then borrowers forward. our household. they them set we classify them going to So now, to a normal or multiple be turning our for at system borrowers, look might might have of but for delinquent to basis those and overall a last limits year exposure for and there sophisticated So, be the and XX:XX an

occur system borrowers. so We have management these them target have detailed if you. can we warning and Thank the in of we then can that them that extract future, events so these early that very

Unidentified Company Representative

sufficient it believe CRO, the crisis, was XX:XX including is and is a XXXX. this by that IMF actually but instead that I answer not our he

we XX So to I wording – will last – the it years. change the

Operator

XX:XX questions in Thank any you, waiting queue. further the see do we not

are Just This release. see that there I raised. KBFG’s additional you. questions before earnings Thank of give we to us end brings no moment the us one close.