[Edaily Marketin Reporter KIM YEON-SEO ] KB Financial Group is set to issue up to 400 billion won in hybrid capital securities. The company is expected to secure investor demand by leveraging the strong creditworthiness of its flagship subsidiary, KB Kookmin Bank, along with the business diversification of its non-banking segments and solid capital buffers.

According to the investment banking (IB) industry on the 7th, KB Financial Group will conduct a bookbuilding process targeting institutional investors on the 21st to issue 270 billion won worth of hybrid capital securities. Depending on the results of the bookbuilding, the company plans to increase the issuance amount to a maximum of 400 billion won.

These hybrid capital securities will be issued with a 99-year maturity and a call option (early redemption right) exercisable after five years. The issuance date is scheduled for the 31st of this month. KIWOOM Securities and HanyangSecurities are serving as lead underwriters.

Hybrid capital securities are equity-like securities recognized as capital for accounting purposes. They are typically issued with no maturity or with long-term maturities of 30 years or more, and their maturity can be extended at the issuer’s discretion. Financial holding companies can use the issuance of hybrid capital securities to increase their capital ratios and expand their loss-absorption capacity.

KB Financial Group’s general corporate bond credit rating is “AAA,” the highest possible rating. Hybrid capital securities are rated two notches lower than the credit rating of the parent company’s core subsidiary—which excludes government support—to reflect their structure, which requires them to absorb losses before subordinated debt and government support. Accordingly, the credit rating for these hybrid capital securities was set at “AA-.” However, the risks associated with the non-exercise of call options and non-payment of interest due to issuance terms were not separately reflected as factors affecting the credit rating.

KB Financial Group’s creditworthiness is significantly influenced by the strong business and financial foundations of its flagship subsidiary, KB Kookmin Bank. KB Kookmin Bank is South Korea’s largest commercial bank in terms of deposits and has secured an extensive branch network and strong market dominance. KB Kookmin Bank accounts for approximately 70% of the group’s total assets. Since many members of KB Financial Group’s management team are former KB Kookmin Bank employees or concurrently serve as executives at KB Kookmin Bank, the level of integration between the two entities is also assessed as high.

Business diversification in the non-banking sector is also cited as a strength. KB Financial Group owns subsidiaries that hold top-tier market positions in their respective sectors, including KB Kookmin Card, KB Securities, and KB Insurance. It has also continued to invest in its non-banking and global segments through acquisitions such as Prudential Life Insurance, Prasac Bank, and Bukopin Bank, as well as a capital increase at KB Capital.

This diversified revenue base enhances the financial holding company’s profit stability and financial flexibility. This is because it allows the group to spread out performance fluctuations across subsidiaries while simultaneously bolstering its own capital through stable dividend income and managing its double leverage ratio.

Credit rating agencies have assessed that KB Financial Group’s financial stability remains at an excellent level. As of the end of 2025, the non-performing loan ratio stood at 1.0% and the Bank for International Settlements (BIS) capital adequacy ratio at 16.2%, indicating sound asset quality and capital buffers. Although there is a possibility that asset quality could deteriorate somewhat due to high interest rates and concerns over an economic slowdown, analysts note that, given the group’s sufficient loan loss reserves and capital buffers, it is unlikely that non-performing loans will expand to the extent that they would undermine financial soundness.

Kim Ye-il, a senior analyst at Korea Credit Rating, stated, “Volatility in financial markets and economic uncertainty are factors that could increase the Group’s earnings volatility,” but added, “The Group is expected to maintain stable profitability based on sustained loan growth, the success of business diversification in the non-banking sector, and dividend income from subsidiaries.”