KB Financial Group, Inc. (NYSE:KB) Q1 2018 Earnings Conference Call - Final Transcript

Jul 19, 2018 • 03:00 am ET


KB Financial Group, Inc. (NYSE:KB) Q1 2018 Earnings Conference Call - Final Transcript


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Peter Kwon

Good afternoon. My name is Peter Kwon, in charge of the IR department at KB Financial Group. We will now begin the earnings conference call for our first half results. Thank you for your participation.

We will have the CFO, Mr. Kim Ki-Hwan as well as the executives heading the major subsidiaries within the group. We will first have the earnings presentation by the CFO, Mr. Kim, and this will be followed by a Q&A.And now CFO Kim will present this year's first half results.

Ki-Hwan Kim

Good afternoon. I am Kim Ki-Hwan, CFO of KB Financial Group. Thank you for joining KBFG's 2018 first half earnings release.

Before going on to earnings highlight, let me brief you on the operational backdrop for the first half of the year. KBFG's loan asset displayed a solid growth of 4% year-to-date based on banks loans in won. Household loan on the back of real estate regulations was up 3%, mostly around non-mortgage loans, i.e., loans for (inaudible), rental and prime unsecured loans. Corporate lending was up 5.1%, mostly around low-risk SME loans displaying an overall positive performance.

In terms of profitability, based on well-balanced business portfolio which underpins solid profit-making fundamentals and through continuous efforts towards cost efficiencies and asset quality improvements, profitability figures for this quarter was also overall positive. However, broader business environment for the financial industry cannot be deemed to be necessarily favorable.

Under the rate hike cycle, there is growing concern for widening household and corporate credit risks, and with continuing global trade dispute, there is negative outlook for the Korean economy, which is known to have high external dependencies. Also, following the US rate hike and strong dollar, there is greater concern for foreign capital outflow from emerging nations, and with higher volatilities of the global financial market, investment sentiment has been constrained, as shown through lackluster share price performance of domestic banks.

The Company, therefore, has strengthened monitoring of various indicators and is closely following risk factors for the overall group in order to preemptively prepare for both internal and external uncertainties and also to diversify revenue sources and expand cross-subsidiary synergies as we enhance earnings stability.

At the same time, as a leading financial group, KBFG is committed to its corporate social responsibilities in making a society where its citizens are most happy. To that end, we are taking more than just a passive donation but an active contribution befitting the stature of a leading financial group and, hence, are thinking hard about social problems and also discovering and designing various different programs.

In line with such efforts, we have multiple activities ongoing, such as providing support to build childcare facilities to respond to the issue of low birth rate, organizing expos for job seekers to solve youth unemployment problem, running a program to help start-ups and SMEs who have technical expertise and setting up funds to nurture social enterprises.

Through such proactive corporate social responsibility programs, KB Financial Group is committed to bringing a real change to