[Edaily Reporter kyoungeun kim ] NH INVESTMENT & SECURITIES announced on the 2nd that it is maintaining its “Buy” rating and target price of 226,000 won for KB Financial Group(105560), which is expected to report third-quarter net income attributable to shareholders in the 1.8 trillion won range, in line with market expectations. Although concerns have grown over a decline in non-interest income across the financial holding sector due to a slowdown in the capital markets, the firm believes the company will continue to post solid results even in an unfavorable environment, thanks to its improved earnings resilience.
Jeong Jun-seop, an analyst at NH INVESTMENT & SECURITIES, explained in a report released that day, “The foundation of stable earnings lies in improved profit resilience,” adding, “Despite a decline in stock market trading volume, the affiliated securities firm is expected to post quarterly net income of 200 to 300 billion won based on its enhanced capital strength, while the insurance subsidiary is expected to see an improvement in the interest margin.”
He continued, “Capital ratios are also expected to rise, which is a factor raising expectations for shareholder returns in the coming year,” adding, “Thanks to exchange rate stability, the Common Equity Tier 1 (CET1) ratio at the end of September is projected to rise by about 10 basis points (0.1 percentage points) compared to the end of June (13.74%).”
The firm further projected, “If exchange rates remain stable through the end of the year, the total shareholder return ratio is expected to rise to the high 50s in 2027, following 52.2% in 2025 and 56.6% in 2026.”
NH INVESTMENT & SECURITIES estimated that KB Financial Group’s third-quarter net income attributable to shareholders would reach 1.8175 trillion won, a 7.8% increase year-over-year. This is in line with the market consensus (1.8210 trillion won), and the firm projected that earnings per share (EPS) would rise 11.1% year-over-year.
Interest income is expected to total 3.3 trillion won, a 0.9% decrease year-over-year but a 5.2% increase from the previous quarter. While rising interest rates will first affect funding costs, causing the net interest margin (NIM) to decline by 2 basis points (0.02 percentage points) from the previous quarter, the analysis suggests that asset growth and one-time interest expense factors will offset the margin decline. Won-denominated loans are projected to grow by 1.7% compared to the previous quarter.
Non-interest income is projected to reach 1.4 trillion won, representing a 41.6% increase year-over-year but a 27.3% decrease from the previous quarter. Analysts explained that while a decline from the previous quarter is inevitable due to the slowdown in the capital markets, the year-over-year growth trend is expected to continue. The loan loss provision ratio is expected to remain below 0.4% at 0.39%, while selling, general, and administrative expenses (SG&A) are projected to reach 1.7 trillion won—a 3.5% increase year-over-year but a 9.5% decrease from the previous quarter. This is because the increase in personnel expenses driven by the capital market boom in the first half of the year is expected to normalize.
Annual net income attributable to shareholders is projected to reach 6.559 trillion won this year, a 12.3% increase year-over-year, and to rise by 1.1% to 6.629 trillion won next year.
Researcher Jeong stated, “While rising interest rates heighten concerns about delinquencies, the bank is maintaining its financial soundness through preemptive provisioning in the past.”