KB Financial Group (NYSE:KB) used its 2025 full-year earnings call to emphasize a rebound in earnings following the fading of 2024 one-off items, a sharp improvement in non-interest income driven by capital markets activity, and a more aggressive shareholder return plan backed by what management described as industry-leading capital adequacy.
2025 profit rose as 2024 one-offs faded
Group CFO Na Sang-rok said 2025 unfolded amid “unprecedented volatility” in exchange rates and market interest rates, with external factors weighing on the operating environment and keeping asset quality pressures elevated. Even so, KB reported 2025 net profit of KRW 5.8 trillion, up 15.1% year-on-year, which management attributed in part to the “fading away of sizable one-off effects,” including the 2024 ELS customer compensation cost.
- ROE of 10.86%, up 1.1 percentage points year-on-year
- Basic EPS of KRW 15,437, about a 20% year-on-year increase
Management noted that fourth-quarter net profit declined significantly quarter-over-quarter due to one-off items, including group ERP costs and provisioning for penalties (including ELS), as well as seasonally weaker insurance performance.
Net interest income growth, but margin pressure persisted
KB said 2025 net interest income totaled KRW 13,073.1 billion, up 1.9% year-on-year, supported by loan balance growth and reduced funding costs through efforts to expand core deposits. That growth came despite concerns about margin pressure as a base rate cut cycle continued through the first half of the year.
As of year-end 2025, the bank’s Korean won loan balance reached KRW 377 trillion, up 3.8% versus year-end 2024 and 0.5% versus the end of September. Household loans rose 3.7% year-on-year and 0.8% quarter-over-quarter, while corporate loans increased 3.9% year-on-year and 0.4% quarter-over-quarter.
Net interest margin edged down on an annual basis. KB reported 2025 group and bank NIM of 1.97% and 1.74%, respectively, both slightly lower than the prior year. The bank’s fourth-quarter NIM was 1.75%, improving quarter-over-quarter as the company adjusted the pace of household loan growth and sought an “optimal funding mix.”
Looking ahead, management said household lending growth is expected to be limited amid government regulation and slower housing transactions. The group said it plans to shift its growth axis toward corporate lending and “productive finance,” focusing household lending more on profitability.
Non-interest income strengthened on capital markets activity
KB pointed to a notable improvement in non-interest income as evidence that its portfolio is positioned for a “money move” toward capital markets. The group’s 2025 non-interest income was KRW 4,872.1 billion, up 16% year-on-year.
Net fee income in 2025 totaled KRW 4,098.3 billion, rising 6.5% (about KRW 248.7 billion) from the prior year. Management attributed the increase to stronger brokerage commissions at the securities business amid higher equity trading values, alongside improvements in bank fee income including bancassurance, fund sales, trust-related income, and fee growth at other capital markets affiliates. The company added that non-bank subsidiaries generate roughly 70% of the group’s fee income.
Other operating income in 2025 was KRW 773.8 billion. Management said it increased about 120% year-on-year, despite the base effect from the reversal of non-life insurers’ IBNR reserves in 2024, driven by performance in securities portfolio management including equity securities. Fourth-quarter other operating income was weaker quarter-over-quarter due to softer bank and securities income amid rising bond yields and a decline in derivatives income at the securities business.
Cost efficiency improved, while provisioning remained conservative
KB reported 2025 SG&A expenses of KRW 7,051 billion, up 1.6% year-on-year, which it linked to ongoing cost efficiency initiatives and cumulative effects from an ERP program implemented over several years. The group’s cost-to-income ratio (CIR) came in at 39.3%, which management described as an all-time low and the first time the group recorded a full-year CIR below 40%.
Fourth-quarter SG&A rose sharply quarter-over-quarter to KRW 2,043.3 billion due to seasonal factors, including about KRW 248.0 billion in group-wide ERP costs and higher advertising and promotion spending.
On credit costs, the group’s 2025 provision for credit loss was KRW 2,318.7 billion, up 15.6% year-on-year. Credit cost for 2025 was 48 basis points. Management said the increase reflected a conservative provisioning stance across subsidiaries to prepare for potential volatility, even as asset quality indicators improved.
During Q&A, the company disclosed specific items reflected in provisions: KRW 69.7 billion related to LTV and KRW 263.3 billion related to an ELS penalty. Management said it is consulting external legal counsel and experts, and while media reports suggest KB has the largest exposure, the group believes it can manage the issue without harming capacity. Management also said the penalty issue is expected to be “completely diffused within the year 2026,” which it indicated could create a rebound once it disappears.
Dividends, buybacks, and capital position
KB’s board approved a year-end cash dividend of KRW 1,605 per share (totaling KRW 575.5 billion). For 2025, total cash dividends were KRW 1,580 billion, up about 32% from the prior year, and total 2025 DPS including quarterly dividends was KRW 4,367, up about 37.6% year-on-year. Management said the year-end amount included KRW 240.5 billion above the existing quarterly uniform dividend amount.
In response to an analyst question, management said the larger year-end dividend reflected several factors, including use of deferred shareholder return (management referenced KRW 190 billion), policy developments related to capital market revitalization and separate taxation on dividend income, an improving PBR trend (management noted it has recently surpassed 0.8x), and a strong share price performance that drove a perceived need to adjust dividend yield upward. Management also referenced a 2025 dividend payout ratio of 27% and said the company qualified as a high dividend-paying company.
For capital, KB said its preliminary year-end 2025 BIS ratio was 16.16% and CET1 ratio was 13.79%. Management added that adjusting for an approximately six basis-point impact from the additional year-end dividend, the “effective” year-end CET1 ratio could be viewed as about 13.85%.
KB said 2025 total shareholder return ratio was 52.4%, up 12.6 percentage points year-on-year. Looking to 2026, management outlined a “first phase” shareholder return plan for the first half of the year totaling KRW 2,820 billion in capital, consisting of:
- KRW 1,620 billion in total cash dividends for 2026
- KRW 1,200 billion in first-half share buyback and cancellation
The board also approved an initial KRW 600 billion share buyback and cancellation to begin immediately after the earnings release, with a second KRW 600 billion tranche planned for the second quarter following another board resolution. Management explained that using a direct acquisition method requires purchases within three months, and splitting into two rounds helps execution timing and extends buyback activity through the year.
On tax-related dividends, management said it qualified for separate taxation on dividend income, and it is also reviewing procedures for “tax-exempt dividends,” including potentially submitting agenda items to the general shareholders meeting. Management added it has preparations underway for a capital reduction dividend, though details were not finalized, and it said it hopes to share more in the future. It also indicated the 2026 year-end dividend could rise further, citing a flexible stance on shareholder returns.
Finally, in Q&A on profitability targets, management said it believes its mid- to long-term ROE target should be raised, and stated it is targeting more than 11% ROE in the mid- to long-term, emphasizing the importance of non-interest income growth and noting improving profitability visibility at overseas entities including KB Prasac Bank.
About KB Financial Group (NYSE:KB)
KB Financial Group Inc is a South Korea-based financial holding company that offers a broad range of banking and financial services. Headquartered in Seoul and listed on the New York Stock Exchange under the ticker KB, the group operates through a set of specialized subsidiaries to provide integrated financial solutions for retail, corporate and institutional clients.
The company’s principal businesses include retail and corporate banking, securities and investment banking, insurance (life and non-life), asset management, credit card and consumer finance, and leasing.
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