KB Financial Group, Inc. (NYSE:KB) Q2 2020 Earnings Conference Call - Final Transcript

Jul 21, 2020 • 03:00 am ET


KB Financial Group, Inc. (NYSE:KB) Q2 2020 Earnings Conference Call - Final Transcript


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Peter Kwon

[Foreign Speech]

Greetings. I am Peter Kwon, the Head of IR at KBFG. We will now begin the 2020 First Half Business Results presentation. I would like to express my deepest gratitude to everyone for participating in our call.

We have here with us our Group CFO and Deputy President, Kim Ki-Hwan, as well as other members from our Group management. We will first hear the 2020 first half major financial highlights from CFO and Deputy President, Kim Ki-Hwan, and then engage in a Q&A session.

I would like to invite our Deputy President to walk us through the 2020 first half major financial highlights.

Kim Ki-Hwan

[Foreign Speech]

Good afternoon. I am Ki-Hwan Kim, CFO of KB Financial Group. Thank you for joining KBFG's presentation on first half 2020 business results.

Before moving on to earnings results, allow me to first present on the operational backdrop. Despite prolonged uncertainties surrounding COVID-19 curve repeating the flattening and rising cycle, helped by strong monetary fiscal policies worldwide in an effort to overcome economic recession, financial markets regained some level of stability. Nevertheless, concerns over global crisis of real economy continues.

If and when COVID-19 second wave hits us despite massive quantitative easing, economic recovery could may well be delayed significantly. Thus, we are in no position to loosen our vigilance, and in the face of ultra-low rate, banking industry is tasked with countering structural pressures as well.

In such an unprecedented crisis brought on by the pandemic, KBFG will fully live up to its role and responsibility, befitting a top tier company, and will proactively respond to changes in the financial paradigm, so as to solidify our position as a leading financial group.

First of all, in order to support companies hit by the pandemic and the vulnerable class, we have provided financial support and KB independently is running various programs including good consumption movement to help small local business operators. Also, we are fully committed to asset quality and risk management. We operate continuous monitoring system on potentially problematic loans and conduct fine-tuned ex-post management of marginal borrowers and have uplifted the Group's risk management system to be prepared for possible extended economic recession.

Also, to be preemptively ready for a possible quality deterioration, we made additional provision of KRW206 billion this quarter. In addition, KBFG is steadfast at its strategic tasks that seek to enhance earnings stability and gain growth engine for the future.

To that end, last April, we acquired PRASAC, Cambodia's biggest microfinance company, as a subsidiary. And in Q3, we'll complete the acquisition process for Prudential Life Korea, a best-in-class company in terms of capital adequacy and channel competitiveness.

Last month, we also entered a strategic alliance with global investor, Carlyle Group, issuing KRW240 billion of EBs, exchangeable bonds. The EBs were issued at zero coupon as the company's high exchange premium and treasury shares were highlighted, KB's undervalued corporate value and growth potential were recognized. It is also considered a best case in the strategic use of treasury