KB Financial Group Inc. — FY2022 Form 20-F
Business context and reporting period. KB Financial Group is a Korea-based financial holding company with banking, credit card, securities, insurance and other businesses. This is an annual report for the fiscal year ended December 31, 2022, filed April 26, 2023, not a standalone Q4 report; the supplied filing text does not provide clear standalone fourth-quarter results. Financial statements are consolidated and prepared under IFRS as issued by the IASB. Amounts below are Korean won (KRW).
Key financial metrics
| Metric | FY2022 / year-end | Prior comparable period |
|---|---|---|
| Total assets | KRW 701.2 trillion | KRW 663.9 trillion at Dec. 31, 2021 |
| Total deposits | KRW 388.9 trillion | KRW 372.0 trillion |
| Total equity | KRW 49.6 trillion | KRW 48.3 trillion |
| Gross loans | KRW 440.7 trillion | KRW 421.6 trillion |
| Net interest income / margin | KRW 13.1 trillion / 2.23% | KRW 11.2 trillion / 2.07% |
| Provision for credit losses | KRW 1.84 trillion | KRW 1.19 trillion |
| Profit before tax / income tax expense | KRW 5.80 trillion / KRW 1.62 trillion | KRW 6.08 trillion / KRW 1.70 trillion |
| Profit for the year | KRW 4.17 trillion | KRW 4.38 trillion |
| Operating cash flow | KRW 5.69 trillion | KRW 2.03 trillion outflow |
| Cash and cash equivalents | KRW 26.2 trillion | KRW 25.3 trillion |
| Capital adequacy ratios: group CET1 / total capital | 13.24% / 16.16% | 13.46% / 15.77% |
The filing does not present a single, directly comparable consolidated revenue figure in the supplied text. It reports major income components separately. Profit attributable to parent shareholders was KRW 4.39 trillion, while consolidated profit was KRW 4.17 trillion because of losses attributable to non-controlling interests.
Year-end borrowings were KRW 71.7 trillion and debentures KRW 68.7 trillion; customer deposits were KRW 388.9 trillion and remained the principal funding source. About 95.5% of deposits had maturities of one year or less or were payable on demand. Kookmin Bank’s year-end liquidity coverage ratios were 99.19% in won and 145.42% in foreign currency, against then-applicable minimums of 92.5% and 80%, respectively.
Net interest income is a key banking revenue measure rather than total company revenue. The efficiency ratio was 50.21% versus 49.72% in 2021; the cost-to-average-assets ratio improved to 1.08% from 1.14%.
Material changes versus FY2021
- Net interest income rose 16.8%, and net interest margin expanded by 16 basis points, as asset yields increased faster than funding costs during the higher-rate environment.
- Total assets rose 5.6% and gross loans 4.5%. Corporate lending grew, while domestic retail lending declined; foreign loans grew notably.
- Credit-loss provisions increased 54.9% to KRW 1.84 trillion, reflecting pre-emptive provisioning amid higher rates and a slowing Korean economy. Non-performing loans increased to KRW 1.92 trillion from KRW 1.46 trillion; the NPL ratio rose to 0.44% from 0.35%.
- Profit for the year fell 4.8%. Net gains on financial instruments at fair value through profit or loss declined 75.2% to KRW 247 billion, and net fee and commission income fell 8.4% to KRW 3.32 trillion.
- Total comprehensive income fell sharply to KRW 662 billion from KRW 4.61 trillion. Accumulated other comprehensive income moved from a KRW 1.05 trillion gain to a KRW 2.71 trillion loss, including losses on debt securities amid rising interest rates.
- Investing cash outflow increased to KRW 20.29 trillion from KRW 3.86 trillion; financing cash inflow was KRW 15.32 trillion. Cash and cash equivalents nevertheless increased to KRW 26.16 trillion.
Outlook, commentary, risks and unusual items
- Management describes the 2023 Korean and global economic outlook as uncertain. Risks include higher interest rates, inflation, exchange-rate volatility, weaker real estate prices, household debt, credit deterioration, geopolitical shocks and market disruption.
- Credit risks include retail and credit-card borrowers, small and medium-sized enterprises, foreign lending, and exposures to construction, shipbuilding and shipping. Credit-card delinquency was 1.01% at year-end 2022, up from 0.91%; the filing cautions that restructured balances can understate delinquency.
- Interest-rate increases supported FY2022 net interest income but may also increase funding costs, weaken borrowers’ repayment capacity, reduce loan demand and lower the value of securities. The filing reports KRW 4.60 trillion of net unrealized losses on financial assets at fair value through other comprehensive income before loss allowances at year-end 2022, versus KRW 1.44 trillion of net unrealized gains in 2021.
- IFRS 17 and Korea’s new K-ICS insurance solvency regime took effect January 1, 2023. The filing’s estimated IFRS 17 presentation of FY2022 results shows assets of KRW 688.6 trillion, liabilities of KRW 634.5 trillion, equity of KRW 54.1 trillion, profit of KRW 3.90 trillion and comprehensive income of KRW 4.05 trillion. These are estimates for comparison, not reported FY2022 results under IFRS 17; the filing notes possible effects on reported revenue, profit timing and insurance capital.
- In January 2023, KB Financial Group merged its two life insurance subsidiaries, with Prudential Life Insurance (renamed KB Life Insurance) as the surviving entity. The report also states that a Kookmin Bank employee misappropriated KRW 14.9 billion between May 2021 and December 2022; a Financial Supervisory Service investigation was ongoing at the report date.
- Other notable matters include continuing litigation concerning approximately US$42 million of Madoff-related redemption payments, an ongoing securities-related claim against KB Securities, and other legal and regulatory contingencies. The filing says outcomes are uncertain.
- The board recommended total FY2022 cash dividends of KRW 2,950 per share, comprising KRW 1,450 year-end and KRW 1,500 interim dividends. Separately, the company purchased and cancelled 5,385,996 shares for KRW 271.7 billion in February–March 2023.
- No quantified earnings or margin guidance is provided in the supplied filing text.
Most important facts for investors to verify
- Reconcile consolidated profit of KRW 4.17 trillion with KRW 4.39 trillion attributable to parent shareholders and the non-controlling-interest loss.
- Review the increase in provisions and NPLs, including foreign-loan quality, restructured credit-card balances and exposures to property-related sectors.
- Assess the sensitivity of net interest income, securities values, liquidity and capital to further rate, currency and housing-market movements.
- Validate the transition effects of IFRS 17 and K-ICS, including insurer solvency ratios, available capital and any need for additional capital.
- Monitor the employee-misappropriation investigation, material litigation and contingent exposures, and confirm the dividend and share-cancellation amounts and timing.