KB Financial Group Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
July 23, 2026

Key Takeaways

  • Positive Sentiment: KB Financial Group delivered strong first-half results, with net profit of KRW 3.885 trillion, up 13.1% year over year, and first-half total operating income surpassing KRW 10 trillion for the first time.
  • Positive Sentiment: Capital and shareholder returns remain a major emphasis: June-end CET1 improved to 13.744%, and the board approved KRW 700 billion of share buyback and cancellation plus a Q2 cash dividend of KRW 1,155 per share.
  • Positive Sentiment: Non-interest income was a standout driver, rising 33.3% year over year in 1H, supported by brokerage fees, capital-market product sales, and stronger card spending; fee income contributed more than 31% of top line for the first time.
  • Neutral Sentiment: Loan growth continued, but management remains selective, with won-denominated loans up 2% versus year-end 2025 and corporate lending boosted by productive finance, while the bank said it will prioritize qualitative growth and portfolio rebalancing in 2H.
  • Neutral Sentiment: Outlook and risk management were cautious but constructive: management expects NIM to improve in 2H, fee income to stay at a higher level despite volatility, and credit costs to remain in the early-to-mid 40bp range amid conservative provisioning.
AI Generated. May Contain Errors.
Earnings Conference Call
KB Financial Group Q2 2026
00:00 / 00:00

Transcript Sections

Skip to Participants
Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Greetings, everyone. I am Jerry Kang, Head of KB FG IR Department. We will now begin the 2026 first-half business results presentation. Thank you very much for participating in today's earnings release. We have here with us today business results presentation, our Group CFO, Sang Rok Na, as well as executives from our group. Regarding the agenda today, we will first have our Group CFO deliver the 2026 first-half business results. Then have a Q&A session. We will now have our Group CFO deliver a presentation on 2026 first-half business results.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Greetings, everyone. I am KB FG CFO, Sang Rok Na. Thank you very much for taking part in the 2026 first-half earnings release. Before we proceed with the business results presentation, I would first like to cover the first-half shareholder return approved at today's BOD meeting. Let's go to page one. Despite the operating environment in the first half of the year marked by high FX rate and heightened financial market volatility through strategic capital management efforts, June-end Group CET1 ratio posted 13.74%, a 10 BP improvement compared to the previous quarter end. According to KB's shareholder return framework, capital that exceeds 13.5% CET1 ratio will be utilized for our second round of shareholder return in 2026. At today's BOD meeting, it was decided to carry out, firstly, KRW 700 billion of share buyback and cancellation.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Regarding the remaining surplus capital, we will comprehensively take into account our earnings, PBR, and dividend yield trends at the end of fiscal year 2026 and use this to fund additional shareholder returns. For your reference, if we take into account the KRW 2,820 billion of the 2026 first round of shareholder returns, which was announced in February, we expect to post KRW 3,700 billion as our 2026 annual total shareholder return. We will deliver on our commitment to the market to maintain industry-leading level across all shareholder return metrics. Going forward, we plan to consistently maintain our differentiated shareholder return policy based on our stable earnings generation capacity. In addition, at today's BOD meeting, a cash dividend of KRW 1,155 per share for Q2 was approved. Let's go to page two.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Through strategic reallocation of capital, reflecting the operating environment and growth prospects of each business segment, we are continuously strengthen a virtuous cycle that enhances capital efficiency across the group, and at the same time, reinvesting in subsidiaries with strong growth potential. As a part of these efforts, in order to absorb the flow of capital market money moving to our recurring earnings base, we decided on two rounds of paid-in capital increase totaling KRW 1,700 billion. This represents a more efficient and dynamic allocation of capital across the group, whereby capital generated by core subsidiaries, including the bank, is reinvested in the securities business, which offers growth potential, which is strong.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Our securities subsidiary plans to utilize the capital secured to proactively respond to changes in the WM market, while providing venture capital and supporting productive finance by expanding its promissory note business and fulfilling the requirements ahead of time for IMA authorization. Going forward, we will further strengthen our group's medium to long-term earnings base across businesses with strong growth potential and high capital efficiency, including the capital market segment. Next, I will cover business results. Q2 net profit posted KRW 1,992.2 billion, and on a first-half cumulative basis, it posted KRW 3,884.6 billion, a 13.1% increase YOY. This was driven by a significant increase in fee income, which pushed the group's first half total operating income above KRW 10 trillion for the first time in its history and sustained its stable growth momentum.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

In particular, our securities subsidiary's contribution to the group's net income for the first half increased to approximately a 21% level, leading the growth in earnings from our non-banking business. Meanwhile, supported by this enhanced earnings capacity, the group's ROE for the first half also posted 14.09%, continuing its improvement trend. For your reference, first half non-operating profit declined significantly YOY. This was mainly attributable to a high base effect from the additional provisioning for ELS-related liabilities in the previous quarter and gains on the disposal of assets held by consolidated funds in the prior year. Let me now walk you through our financial results in greater detail by business segment. For the first half of 2026, the group's NII recorded KRW 6.4783 trillion, a slight increase YOY.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

However, it was a slight decrease QOQ due to a slight drop in NIM from pre-emptive funding in anticipation of an interest rate hike in the second half of the year. Next is growth of loans in Korean won. As of the end of June 2026, the bank loans in won amount to KRW 385 trillion, up 2% over the end of 2025 and up 1.6% QOQ. Household loans shifted back to a solid growth trend, reaching KRW 184 trillion, while corporate loans recorded KRW 201 trillion, growing 2.2% QOQ, mostly thanks to the growth of productive financing. In the second half of the year, while not compromising asset quality, we plan to pursue our growth strategy with a focus on qualitative growth, such as portfolio shifts through productive financing.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Next, net interest margins on the bottom right. Bank NIM for Q2 recorded 1.74%. Due to intensifying competition in corporate loans, yield on assets remained similar QOQ. The increase in marketable deposits, along with preemptive funding in preparation for a second half of the year market rate hike, pushed up cost of fund, resulting in a NIM drop of three basis points QOQ. Meanwhile, group NIM recorded 1.94%. Due to the impact of the lower bank NIM, combined with the decline in credit card financial assets and preemptive funding by KB Capital, group NIM is down five basis points QOQ. However, in the second half of the year, with base rate hikes, asset and liability repricing effects, and normalization of funding structures gradually incorporated, we expect NIMs to show an improving trend.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Accordingly, on an annual basis, aligned with our forecast from the beginning of the year, we expect an improvement YOY. Next, non-interest income. Group non-interest income for the first half of the year recorded KRW 3.6292 trillion, demonstrating a significant improvement of 33.3% YOY. In particular, cumulative net fee income for the first half reached approximately KRW 3 trillion, and in Q2 rose 17.8% QOQ to KRW 1.6019 trillion, continuing a double-digit growth trend for three consecutive quarters. This was mainly driven by an expansion in securities brokerage fees under favorable stock market conditions, alongside sales of capital market-linked products such as equity funds and ETFs by the bank, as well as an increase in personal credit card spending.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

As a result, net fee and commission income contributed more than 31% to our top line for the first time, driving the group's solid performance. Meanwhile, as for the first half of the year's other operating income, mainly due to a decline in insurance income caused by rising loss ratios in long-term and auto insurance, recorded somewhat sluggish results compared to the same period last year. However, in Q2, loss ratios showed improvement, and with the addition of CSM impairment reversals, insurance operating income increased. While promising industries such as AI and semiconductors led to significant valuation gains on unlisted stocks at our investment subsidiary, resulting in a performance that rose 29.1% QOQ. Next, moving on to general and administrative, G&A, expenses.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

1H G&A expenses increased 8.9% YOY, but backed by solid growth in total operating income, the group CIR posted 36.2%. Excluding Q4, when one-off expenses such as ERP typically occur, the group has stably managed its CIR in the mid to upper 30% range every quarter since 2023. Going forward, while actively expanding investments for future growth, we will strengthen earnings capacity and also efficiently manage recurring expenses to maintain a downward stabilizing trend in group CIR. Next, on page eight is a group provision for credit losses. Q2 credit loss provisions recorded due to one-off provisioning related to non-performing corporate loans at the bank. It recorded KRW 519.8 billion, a slight increase QOQ. Excluding these one-off factors, the group's overall asset quality continues to show an improving trend.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Particularly, KB Card's asset quality is stabilizing, primarily in personal cards and card loans, easing provision burdens, while the savings bank subsidiary is also seeing real estate PF-related risks gradually resolving. As a result, Q2 group credit cost recorded 38 BP, falling QOQ, and on a cumulative basis for the first half, it came in at 39 BP, significantly improving by 15 BP YOY. Lastly, moving on to group capital ratios. As of the end of June, preliminary estimates suggest a group BIS ratio of 15.91% and a CET1 ratio of 13.74%. Risk-weighted assets, RWA, recorded approximately KRW 370 trillion, up 1.1% QOQ, but remains well within our projected RWA annual growth target. To consistently deliver on our shareholder return commitment, we will maintain a balanced pace of asset growth while driving capital efficiency and profitability through WARWA-oriented asset rebalancing.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Detailed breakdowns of our financial results are provided in the following slides for your reference. This concludes KB Financial Group's first-half 2026 earnings presentation. Thank you for your time.

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Thank you for the presentation. Now we will have the question and answers. Those of you joining on the internet, please use the phone number on the last presentation slide. Those listening on their phones, please press the star key and number one to ask a question. We will wait for questions. We have the first question. From Goldman Sachs, we have Park Sinyoung, Head of Center. Please ask your question.

Sinyoung Park
Sinyoung Park
Head of Equity Research at Goldman Sachs

Thank you very much. I am Park Sinyoung from Goldman. Regarding your total shareholder return for the first half, for your cash and for your own shares. Can you tell us the distribution also? For price to book multiple for KB, I think that it has gone beyond one multiple. Can you tell us about how you are going to grow your cash dividend? Regarding the reduction or impairment capital that was discussed at GSM, can you tell us about more details? I think according to the FX fluctuations, there is some change into the capital ratio. Do you have any plans to revise the capital ratio? Regarding your target ROE level compared to your competitors, do you have plans to share them with us? Thank you very much.

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Thank you very much for your questions, and we will soon answer them.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

I will answer the questions. Thank you very much, Sinyoung Park, for your great questions. As you just mentioned, our CET1 ratio of excess capital that exceeds 13.5%, before the closing of the fiscal year, we have plans to return all of it to our shareholders, so that is still standing. We had the share buyback and cancellation of 700 billion KRW, and we have about 180 billion KRW remaining. We believe that there could be two scenarios, considering the flexibility. In the first case, the year-end CET1 ratio, capital ratio management is very important. From last year to this year, when you look at the quarterly capital ratio trends, in Q4 there were seasonal effects, so that is why it was very challenging to uplift the CET1 ratio.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Like always, it is very important to have good capital management, capital ratio management for Q3. It is true, our earnings capacity has strengthened, so there are positive effects. There are macro variables like the FX rate. We do not really know what will happen, so there is still uncertainty for other factors. That is why we believe that we need to be more flexible in the timing. Secondly, as you asked, we have reached PBR of one multiple, and in that case, for cash dividends and share buyback and cancellation, we are thinking of maybe adjusting the ratio of the two, but we are not saying that we are going to shake things up. It seems that we are going to have the annual earnings size that is going to be more or more materialized.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

We think the cash dividend will depend on the amount, I think that we will need to consider these factors. Regarding the method and the timing, I think that we will need to be more flexible. Secondly, related to shareholder return linked to our capital ratio, I think you asked a question, I think we are thinking of the best method. Until next year, we already disclosed our plan. However, what we're thinking about is the shareholder return related to our capital ratio. This formula will not be greatly affected, because we think that if we are in a era where ROE is going to be strengthened, then we will need to think about other methods as well. That is why we are going to consider many factors so that there seems to be there is room for improvement.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

We don't have anything concrete yet that we can share with you. I think that will be what I can share with you today. Thank you very much for your questions.

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Thank you so much for that answer. We would like to take the next question. Next question's from iM Securities, Seol Yong-jin, researcher. Please ask your question.

Yong-jin Seol
Analyst at iM Securities

Thank you for giving me the opportunity to ask a question. I have two questions. First of all, recently, there was a large fluctuation in margins. To look at this in more detail, I would like to hear a breakdown of the factors that impacted the margins, and what is your forecast for the 2H margin? Second of all, the return of ELS, could you provide more detail, that reversal of ELS?

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

I'm the CFO of the bank. First of all, about the NIMs. In Q2, NIMs went down 3 basis points to 1.73%. YOY, based on the half year, it went up 2 basis points. In terms of operation and funding, we can look at this in these two perspectives. In terms of operation, we are trying to focus on increasing the productive finance, and we are trying to focus more on more stronger loans. We are also focusing more on conservative loan management, so that led to a reduction in new spreads. This shows that we are focusing on attaining strong customers and also enhancing our adequacy, and focused more on growing in terms of the larger customers. In terms of funding, our KRW 5.8 trillion increase has helped us enhance or improve in terms of funding cost.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

We did lose a part of our time deposits because of the money move. MMDA and marketable deposits are areas where we have focused on funding preemptively to address that change. That has led to a funding cost increase. This is going to alleviate as time goes by. In terms of NIMs forecast, in terms of operation, compared to other banks, we have a 12-month recurring refreshing of loans. We have a lot of that compared to other banks. The bank's profitability is going to increase based on that. In Q1, to focus on attaining very strong customers, we were very aggressive with our rates. In the latter half of the year, for corporate loan review and approval, we're going to be a little more conservative.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

\We are also going to enhance our portfolio and focus on smaller customers to enhance our profitability and diversity as well. Looking at the liquidity, we are going to be very flexible in terms of our funding at WM and core deposit and payroll accounts. Those are areas where we are going to highlight. We are also going to attain more personal time deposits. Ultimately, the annual NIMs outlook will be a slight increase compared to 2025, as we have announced in the early half of the year or at the beginning of the year. In terms of ELS provisioning, there is a decision to be coming in the end of July. The Financial Supervisory Service and Financial Services Commission, they are still pending decision.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

That was not built into the report this time. We are going to build it or incorporate it into the reversal going forward.

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Thank you very much for the answer. We will take the next question. From Hanwha Investment & Securities, we have Do-ha Kim on the line. Please go ahead with your question.

Kim Do-ha
Analyst at Hanwha Investment & Securities

Thank you very much for the opportunity. I have two questions. My first question is about shareholder return. You mentioned KRW 700 billion of shareholder buyback and cancellation. You mentioned that probably you're thinking about increasing the dividend for the fiscal year-end. Looking at the current level for Q3, there is the remaining shareholder return that you have to give. Well, it seems that maybe you had done that because there's only KRW 700 billion left. You mentioned that if you're going to give out more in February of next year, I think that will not actually be completely adherent to what you mentioned, because if so, utilizing it for dividend, maybe it's because you're going to use it from securities subsidiary because insurance subsidiary cannot.

Kim Do-ha
Analyst at Hanwha Investment & Securities

I am sure that you have very strong shareholder return, but it seems that for the funding schedule, it's a bit complicated or mixed up. Regarding the market's expectations for you, I think there might be some confusion. Regarding this tangled web of funding schedule that we're thinking of in the market, if you can explain the situation to us, I think we can actually predict the future funding flow. Secondly, related to the loans, I think that there is the corporate loan competition that you mentioned that could have been a sobering effect. Can you tell us about any plans for loans for different types of borrowers? It would be very helpful. Thank you very much.

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Yes, we will hold and soon answer your questions. Thank you very much.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Thank you very much, Do-ha Kim, for your insightful questions. Regarding our funding schedule, well, it's not quite tangled, there's going to be KRW 180 billion that is remaining, but that is not really a wrench in our process. From next year, there's going to be capital reduction dividends. Regarding those dividends, we do have profits that are sufficient to give out dividends, we believe that we have no more issues there. You also asked, I think, a question regarding capital reduction dividends that we're going to probably have from next year. I hope that you understand that. Regarding the dividends from our life insurance, well, it was also included, it's not difficult for our insurance subsidiaries to give out dividends, it's not that our funding schedule is very complicated.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Well, regarding the hybrid bond issuance and others, we have ample room in our funds, I do not think you need to be very concerned with that. I think that you can take reassurance that our shareholder return is going to be normal.

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Thank you for that answer. We will take the next question. From HSBC, Mr. Won Jaewoong, please ask your question.

Jaewoong Won
Jaewoong Won
Director of Equity Research at HSBC

Thank you for those very strong performance in spite of the unfavorable environment. I'd like to ask about the non-banking business. In the securities company, you recently had capital injection, you're expanding on existing businesses and also trying to begin the IMA business as well. NH Investment & Securities and Hanguk FG, compared to those companies, the KB FG is much bigger, and the securities company is also much bigger. While doing IMA, there might be conflicts of interest among the customers. What are your thoughts on that? If you are able to begin the IMA business, then how much of a profit will be generated, and how much it will grow your balance? I would like to know what your projections are on that. Second of all, leverage trust products are being sold recently, and through bank trust, a lot of sales were made.

Jaewoong Won
Jaewoong Won
Director of Equity Research at HSBC

For non-interest area, there was a lot of fee income as well. Bank trust leverage, how much does it take up? What is the balance, and how much is it contributing?

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Allow us to prepare to answer that question. Thank you for the very good question.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

One part of your question was about IMA. If we are able to fulfill the KRW 8 trillion capital requirement, it won't go into full-fledged business right away. It actually will have to be maintained for two years. Our goal is not to expand IMA business right away but actually gradually prepare for that area of business. Also, about conflicts of interest with the bank business, there will be no conflict of interest, but it's actually going to show a lot of synergistic effect across the securities and bank subsidiary. A lot of deals take place concurrently across the securities and bank, and senior loan and subordinate loan, sometimes the roles are split between those two subsidiaries. We believe that there's going to be much more synergistic effect rather than conflict of interest with the bank.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

About leveraged ETF sales, our CRO will be answering that question. Leveraged ETF trust product was part of your question. At KB, we don't sell this leveraged ETF product. This was probably referring to what has taken place at other companies. For customer asset risk management, we are actually not selling that product as yet. About household loan and corporate loan growth projections for the latter half of the year, that was a question that was not addressed earlier. Household loan QOQ, our growth has posted KRW 1.7 trillion and 0.9%, and YOY, 0.5% increase. Because of the taxation on capital gains of owners of multiple homes, we have been focusing on other areas for growth. Of course, there's a ceiling on total home loan.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

In terms of profitability, we are going to grow within our plans, and we are also going to focus our growth on policy loans. For corporate loans, our balance amounts to KRW 200 trillion, a little over KRW 200 trillion, and that would be QOQ 0.2% growth, a KRW 4.3 trillion growth. Because of a productive finance policy, we are going to have to continue on this trend in the latter half of the year. We have been focusing on companies, and as we try to build up our fundamentals, we are showing healthy conversion to SMEs rather than SOHOs. For household loan profitability management and adequacy capital quality management, we have to be very selective. In the past, our household loan growth rate target was 1%-2%, and our target is going to be maintained at that level.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

For corporate loan, we will continue with the productive financing, and the transition to SMEs is already taking place. Portfolio is going to be diversified for better growth prospects, and we are going to focus on SMEs and also conglomerates for growth. Corporate loan growth will be around 6% to 7% throughout the year, as we have said in the beginning of the year.

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Thank you so much for those answers. We will take the next question. From JPMorgan, we have Cho Jihyun. You're on the line.

Jihyun Cho
Jihyun Cho
Executive Director at JPMorgan

Thank you very much for the opportunity. Regarding shareholder return, I think I'm a little bit confused, I would like a clarification, I know there is KRW 180 billion that is remaining in the second half, and if it needs to be calculated into shareholder return resources for 2026, I think there needs to be share buyback and cancellation, or there needs to be some cash dividends that is distributed. Regarding this KRW 180 billion, can you tell us about how this will be handled? For your share buyback and cancellation plans, you mentioned that it's going to be completed in mid-December. When this is executed a bit earlier, does it mean that share buyback will be possible within this year? That is my first question.

Jihyun Cho
Jihyun Cho
Executive Director at JPMorgan

Second question is G&A has grown quite a lot. Can you tell us about the reason behind that? It will be very helpful. Another question is that in Q2, there has been a lot of capital market volatility that is quite severe. In the second half, can you tell us about your outlook for fee income? Is there going to be a peak out in this quarter and it's going to go down, or are there other expectations you have for fee income? My last question is about Q2 provisioning management. I know that you did well in Q2. Can you tell us about the second half and this year's provisioning outlook or target that you have? Thank you very much.

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Thank you very much for your questions. We will soon answer them. Please hold.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Thank you very much for your insightful questions. Regarding shareholder return, to answer that question, your question holds the answers. We're going to choose one out of the two methods and to enact the additional shareholder return. We do have a trust contract, when we have early execution of share buyback, we can also do it again. In the past, that was impossible, now it is not. It is still open, the possibilities are open, we have reached PBR of 1 multiple, as you mentioned, we could have adjustment toward cash dividends, it could be included into our fiscal year-end dividend. Regarding the reason why G&A has gone up, there were very good profits in security subsidiary. There was some compensation that was increased for their employees, and because of the stock market boom.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

There was the stock related compensation costs or fees that also increased. There was the education tax that was changed, and the corporate tax that was also changed as well. The education tax effect go into the G&A, that is why we had the increase in G&A. The impact from education tax, if we exclude that, then on a yearly basis, there was about 3.5% of increase in G&A for this year that we think that could be managed within. Regarding the capital market, the fee outlook, that was your question. It seems that in the securities market, there is very huge volatility. Regarding the level of fee income, whether it can be maintained or not, it's very limiting for us to give you an outlook.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Regarding the volume of securities transactions, the amount of securities transaction related amount, well, it is true that it really has gone up compared to the past, related fee income will probably go up a level compared to the previous year and remain there. Even if there is less coming in than by CIB, there are some big deals that are actually in our plans for the second half. The fee income related to productive finance, it can also be a complementary factor. In the first half, there was ECM or DCM securities that was a little bit sluggish, we think in the second half, we have plans that will be executed, if that happens, the fee income related to the securities or capital market, we think that we could have a good supplement.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

We are going to ask the CRO of our holdings group related to provisioning. Yes, I would like to answer your question related to provisioning. It's true that in Q2, CCR was 39 basis points, on a QOQ basis, it is improving. Until now, we had conservative provisioning policy, for our loss absorption capacity, we secured that. Related to higher portfolio management based on quality, we had the normalization of provisioning as well. However, at this juncture, we are seeing the aftermath of Middle East situation and high FX rate and the interest rate and situation is currently going on. If we have sluggish related industries for SMEs or SOHOs or marginal borrowers or vulnerable borrowers, we cannot leave out the possibility that asset quality will deteriorate.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

That is why in the second half, we will maintain our conservative provisioning stance. Accordingly, there could be some fluctuations, on a basis for this year, we think that it will be in the early to mid-40 basis points level. Thank you.

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Thank you for that answer. We don't have any people waiting to ask questions. We will wait for a while for people to line up their questions. From Samsung Securities, Kim Jae-woo. Please ask your question.

Jae-woo Kim
Analyst at Samsung Securities

I have just one question. ROE has gone up quite significantly. The ROE, what is your target figure for ROE? For the competitor, by 2027, they were looking at 10%, they have adjusted that to 12%-15%. KBFG, I would like to know, do you have any guidance on how high your ROE will go? In connection with that, the securities subsidiary performance was quite strong, and this was probably very helpful. The market's concern is that the high volatility in the market calls for a better stability, or in other words, to maintain the performance or earnings at this higher level. Could KB Securities please respond to this question?

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Please bear with us while we prepare to answer.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Thank you so much for that very good question. In terms of ROE, this year, our prediction, it's probably going to exceed 11%, and we're very much looking forward to this. In mid to long-term, our target for ROE is around 13%, and we're probably going to hit that target higher than we initially expected. As you asked in your question, the ROE had gone up mostly thanks to the securities subsidiaries of strong performance. Because of fluctuations and volatility in the security market, this might go down again. This strength of gains, will that be able to withstand that volatility? As it was stated in your own report, the transactions in the stock market, structurally it's expanding and growing, and this is probably going to help uphold such gains. KB Securities are also preparing to better weather the volatility.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

The IB performance and earning is becoming much more visible and are recovering. Particularly in S&T, particularly trading, we have been lacking compared to our competitors. In the first half of the year, we have seen improvement in that area, and we are looking forward to upholding that improvement in the latter half of the year. The portfolio has to be diversified to be able to maintain the increased gains and performance in the securities. In terms of venture capital, and we will be able to play a larger role, and we have high expectations, not only in retail, but for large deals and also capital transactions for overseas clients and OCI. The fact that we have to bring in more funds for that, a lot of that is taking place in tandem. We're trying to expand our customer and client base and diversify our portfolio to better weather volatility and try to maintain that stronger earnings basis and actually pull it further higher.

Company Representative at KB Securities

I'd like to add on to that. I'm from KB Securities. The CFO has answered quite sufficiently. I'd just like to add on to that. Digital platform advancement, which was mentioned in your question, that's something we're also pursuing. Our MTS is called M-able, and it is separate from other systems. An ETF, and domestic securities, a stock view, those are all provided in a one-shot view, and we are going to enhance the services in the latter half of the year. We're going to further advance our MTS and make it much more competitive. I just wanted to add that point.

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Thank you very much for your answers. It's already 4:43 P.M., so I think this will be the last question. From Daol Investment & Securities, Kim Hye-young, you're on the line.

Kim Hye-young
Analyst at Daol Investment & Securities

Thank you for this opportunity. I just have one quick question. As you had answered previously, I understood, and on a group level for ROE exceeding 11% this year, and I think it was said that 13% is your target. Can you tell us about when you will reach the target ROE? For the COE level, can you also tell us about the level that you have determined?

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Thank you very much for your questions. We will soon answer them.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Thank you very much for your insightful questions, although they were quite challenging questions, because I think we mentioned our mid to long-term ROE goal for our Group, and it's not very easy for us to answer the goal for each subsidiary. For the Bank, for ROE, I think exceeding 11% is probably our target. For Securities subsidiaries, 14%, and for Insurance, 13%-14% we think will be maintained. However, for Card, recently there were challenging operational environments, so the ROE has fallen a bit. We want to pull it up to a 10% or so level. Related to this, I think you can just refer to it. Regarding COE, well, because we have PBR 1 multiple that we have achieved regarding COE.

Sang Rok Na
Sang Rok Na
Group CFO at KB Financial Group

Well, if we say it's 10% level now for ROE, for COE, we also think that 10% would be appropriate. However, for PBR, if it goes beyond 1 multiple, it might go below 10%, is our prudent guess.

Jerry Kang
Jerry Kang
Head of Investor Relations at KB Financial Group

Thank you so much for that answer. There are no more people to ask questions. This brings us to the end of our earnings release. Those questions that were not asked during this session, please address them to the IR team. This brings us to the end of the 1H 2026 KBFG earnings release. Thank you.

Executives
    • Jerry Kang
      Jerry Kang
      Head of Investor Relations
    • Sang Rok Na
      Sang Rok Na
      Group CFO
Analysts
    • Sinyoung Park
      Head of Equity Research at Goldman Sachs
    • Yong-jin Seol
      Analyst at iM Securities
    • Kim Do-ha
      Analyst at Hanwha Investment & Securities
    • Jaewoong Won
      Director of Equity Research at HSBC
    • Jihyun Cho
      Executive Director at JPMorgan
    • Jae-woo Kim
      Analyst at Samsung Securities
    • Company Representative at KB Securities
    • Kim Hye-young
      Analyst at Daol Investment & Securities
Powered by Quartr