Connect to share and comment

(2nd D) KB Financial Q2 net tumbles 70.4 pct

PlacardEnlarge
(Globalpost/GlobalPost)

SEOUL, July 26 (Yonhap) -- KB Financial Group Co. said Friday its second-quarter earnings fell 70.4 percent on-year due to a fall in its profit margin and one-off valuation loss from its investment in a foreign bank.

Net profit amounted to 163.5 billion won (US$147 million) in the April-June period, compared with 551.6 billion won the previous year, South Korea's No. 2 banking group said in a regulatory filing. In the first half, the group's earnings declined 50.3 percent to 575 billion won.

The group's bottom line was sharply lower than a consensus of 318.6 billion won in a poll made by Yonhap Infomax, the financial news arm of Yonhap News Agency.

KB Financial is among major local banking groups, which have suffered from falling profitability as a long streak of low rates squeezed their lending margin and a series of corporate overhauls led them to set aside higher loan-loss reserves.

The group said the weaker earnings came as its net profit margin, a gauge of profitability, declined and posted a one-off valuation loss from its stake in Bank CenterCredit, a Kazakhstani bank, in calculating the reserves.

The group's net profit margin (NIM), a key barometer of profitability, came in at 2.69 percent in the second quarter, down from 2.73 percent in the previous quarter.

Kookmin Bank, the flagship unit of the group, purchased a 41.9 percent stake in the Almaty-based bank for around 940 billion won in 2008, but it has incurred losses worth 400 billion won due to the fallout from the global financial crisis.

The group also said that it set aside loan-loss reserves worth 351.5 billion won in the second quarter, up from 7.8 percent three months earlier.

"The group will make efforts to achieve the NIM target at 2.7 percent for this year," Yoon Woong-won, the chief financial officer of the group, said in a conference call.

He said that in the third quarter, the group's NIM may reach near that of the second quarter if it strives to recollect delinquent loans.

Kookmin Bank reported an 89.8 percent decline in net profit to 48.8 billion won in the second quarter.

The group's total assets stood at 376 trillion won as of end-June, up from 368.4 trillion won in the previous quarter.

Shares of KB Financial closed at 35,650 won on the main bourse, down 0.28 percent from Thursday's close. The results came after the market closed.

<All rights reserved by Yonhap News Agency>

http://www.globalpost.com/dispatch/news/yonhap-news-agency/130726/2nd-d-kb-financial-q2-net-tumbles-704-pct