KB Financial Group NYSE: KB reported first-quarter 2026 net income of KRW 1,892.4 billion, as the lender pointed to resilient fundamentals despite what management described as “unprecedented dual headwinds,” including a sharp rise in exchange rates and the Middle East war.
Chief Financial Officer Sang Rock Na said net income rose 11.5% year-over-year, driven by stable interest income and “significant” growth in net fee income from the bank’s securities and asset management businesses. Group return on equity improved 0.9 percentage points from a year earlier to 13.94%.
Board approves treasury share cancellation and expanded shareholder returns
Na emphasized KB Financial Group’s shareholder return framework, describing it as an “industry’s first” quarterly dividend and share buyback program, alongside what he called Korea’s only CET1-linked corporate value enhancement policy.
He said the board resolved to cancel all existing treasury shares, totaling approximately 14.26 million shares, or about 3.8% of total issued shares. Na described this as the largest-ever single cancellation in the industry in terms of value. While recent amendments to Korea’s Commercial Code mandate treasury share cancellation with a one-year-and-six-month grace period, Na said KB opted for immediate cancellation “upon the amendment to the law.”
For first-quarter shareholder returns, management said the board approved:
- A quarterly cash dividend of KRW 1,143 per share, totaling KRW 405.4 billion
- A second round of share buyback and cancellation for the first half of 2026 totaling KRW 600 billion
Na said the first-quarter cash dividend per share, reflecting the current buyback, increased by KRW 231, a 25.3% increase year-over-year. He added that KB completed an initial purchase of KRW 600 billion as part of a KRW 1.2 trillion buyback-and-cancellation plan for the first half, and the group plans to proceed with additional purchases “immediately.” He also said 3.9 billion shares acquired in the first round will be canceled in a single batch on May 15, together with the 14.26 million treasury shares already held.
Net interest income rises as NIM improves
KB Financial Group reported net interest income of KRW 3,334.8 trillion for the quarter, up 2.2% year-over-year. Na attributed the result to cost control and an “optimized funding mix strategy,” including expansion of core deposits, even as the company cited “strong capital outflows to the capital markets.”
As of the end of March 2026, KB’s Korean won loans totaled KRW 379 trillion, up 0.4% compared with year-end. Household loans declined 0.4% from year-end, which management linked to household debt management regulations and rising market interest rates. Corporate loans grew, with Na saying loans to large corporates continued to rise while “high-quality SME loans centered on Productive Finance” contributed to overall corporate growth of 1.2% versus year-end.
Net interest margin improved sequentially. Na said first-quarter group NIM was 1.99% and bank NIM was 1.77%. He said bank NIM rose 2 basis points quarter-over-quarter due to core deposit expansion and repricing of high-rate term deposits, while group NIM improved 4 basis points quarter-over-quarter, also supported by broader improvement in card assets such as credit card receivables and installment financing.
Asked about margin guidance, Na said KB’s earlier assumptions included expectations for the Bank of Korea base rate to decline, but “recently… increasing it is coming up.” He added that compared to the company’s plans last year, the base rate outlook “will probably have a slight increase and end there.”
Record non-interest income driven by fees, while insurance-related profit declines
Non-interest income reached KRW 1.6509 trillion, up 27.8% year-over-year and the highest quarterly level in the group’s history, Na said. Net fee and commission income rose 45.5% year-over-year to KRW 1.3593 trillion, an increase of about KRW 425.3 billion. Management credited growth in fee income from capital markets subsidiaries, including securities and asset management, as well as improved wealth management fees at the bank.
Na also highlighted growth in the group’s trust and asset management businesses, saying assets under management increased 55.9% and 18.4% quarter-over-quarter, respectively. He said non-banking subsidiaries accounted for approximately 72% of group fee income, and KB plans to “further solidify” its fee base through efficient capital allocation leveraging its non-banking portfolio.
However, “other operating profit” fell year-over-year, as Na cited intensified competition for new contracts across the industry and downward pressure on insurance operating profit due to a higher loss ratio in long-term insurance. Other operating profit was KRW 291.6 trillion, down 18.5% year-over-year, he said.
Costs rise, provisions fall, and capital ratios reflect FX headwinds
G&A expenses were KRW 1.7649 trillion. Na said expenses rose year-over-year despite cost-efficiency efforts, primarily due to higher taxes and dues following year-end tax reform. He also noted that strong performance, particularly at securities and the bank, led to bonus-related adjustments that increased expenses. Even so, Na said the group’s cost-to-income ratio was 35.4%, supported by an all-time high in total operating income of about KRW 5 trillion and ongoing cost structure optimization.
Credit loss provisions declined to KRW 493.2 billion, down 24.8% year-over-year, which Na attributed largely to the absence of last year’s one-off large-scale bank provisioning and to conservative risk management. The group’s credit cost ratio fell 14 basis points year-over-year to 40 basis points.
In response to questions about asset quality and provisioning, Chief Risk Management Officer Hong Sun Yum said KB maintained a conservative stance and viewed the 40 basis point credit cost level as “attainable” for now, though he cautioned that the Middle East war and FX pressure could affect asset quality. Hong said the group would continue preventive provisioning for vulnerable borrowers and work to reduce exposure to existing real estate projects through restructuring and sell-offs where possible.
On capital, Na said the group’s preliminary BIS ratio was 15.75% and CET1 ratio was 13.63% at the end of March, with CET1 down about 19 basis points quarter-over-quarter. He cited the KRW/USD exchange rate rising by nearly KRW 80 during the quarter and the impact of large-scale shareholder returns as headwinds, while saying earnings generation and RORWA-focused capital management helped keep ratios stable.
Risk-weighted assets were KRW 366 trillion, up about KRW 9 trillion, or 2.5%, from year-end. Excluding FX impacts, Na said the increase was limited to KRW 4 trillion, or 1.1%, and remained within the group’s target level.
During the Q&A, Na said about 70% of group RWA is allocated to the bank and 15% to securities, with the remainder spread across other subsidiaries. He said KB’s approach is to allocate more RWA toward areas with higher profitability and growth potential, while reducing capital in areas with lower RORWA and ROE.
Management also addressed the potential benefit from operational risk RWA deregulation tied to prior ELS-related issues. An operator stated that KB had paid about KRW 745 billion in voluntary compensation to customers, and if recognized in the first half of next year, it would have a positive 20 basis point impact on CET1.
Regarding global earnings contribution, Na said KB Bukopin has undergone years of restructuring and IT upgrades, which he said created a stronger operational foundation. He said the profit contribution of global operations was about 6.5% last year and the group’s “prudent prediction” is that it could rise to about 6% to 7% this year.
On loan growth expectations, a bank executive said the group is targeting household loan growth of 1% to 2% and corporate loan growth of 6% to 7%, with total bank credit growth expected to average around 4% for the year, citing regulatory caps on household lending and a focus on “Productive Finance” for corporate and SME lending.
About KB Financial Group NYSE: KB
KB Financial Group Inc is a South Korea-based financial holding company that offers a broad range of banking and financial services. Headquartered in Seoul and listed on the New York Stock Exchange under the ticker KB, the group operates through a set of specialized subsidiaries to provide integrated financial solutions for retail, corporate and institutional clients.
The company's principal businesses include retail and corporate banking, securities and investment banking, insurance (life and non-life), asset management, credit card and consumer finance, and leasing.
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