KB Financial Group Q4 net earnings reach 43.9 bln won

(ATTN: TRIMS lead; ADDS remarks by the group's president in last 3 paras)
SEOUL, Feb. 11 (Yonhap) -- KB Financial Group Inc., South Korea's No. 3 financial
services company, said Wednesday its fourth-quarter earnings reached 43.9 billion
won (US$31.3 million), with its flagship banking unit logging its first quarterly
loss in four years.
Sales amounted to 18 trillion won in the October-December period, and operating
profit reached 33.8 billion won, the group said in a regulatory filing.
No yearly or quarterly comparable figures were available as the financial group
was launched in late September with eight affiliates, including flagship Kookmin
Bank, under its wing.
For all of 2008, the group posted a net profit of 1.88 trillion won, down 32.1
percent from the previous year, it added.
"The weaker bottom line came as the group set aside more loan-loss reserves to
brace for the restructuring of construction firms and shipbuilders and the
slowing economy," an official at KB Financial Group said.
The group put aside an additional 420.9 billion won in reserves for the corporate
revamp, bringing total reserves to 1.19 trillion won earmarked in the fourth
quarter.
Shares of KB Financial Group declined 3.76 percent to 34,550 won on the main bourse.
The outcome came as South Korean lenders have been increasingly wary of providing
lending to households and smaller firms because the slowing economy and the
credit crunch are increasing the amount of bad loans.
As part of a corporate restructuring drive, local banks decided in mid-January to
end support to two ailing companies and reschedule debts at 11 builders and three
shipbuilders.
The group's total assets reached 320 trillion won as of the end of December, up
20.8 percent from the previous year.
Meanwhile, Kookmin Bank, the flagship unit of the group, posted a net loss of
318.5 billion won in the fourth quarter, compared with a 580 billion won profit
the previous year. It marked the lender's first quarterly loss since the fourth
quarter of 2004.
Kookmin Bank's net interest margin (NIM), a key barometer of profitability,
reached 3.03 percent in the fourth quarter, up from 2.89 percent in the previous
quarter.
The lender's capital adequacy ratio, stood at 13.2 percent as of the end of
December, up 3.4 percentage points from the end of September. Kookmin Bank said
it increased capital worth about 4 trillion won last quarter.
Since late last year, South Korean lenders have been under pressure to raise
their falling capital adequacy ratio, a key barometer of financial soundness that
measures the percentage of a bank's capital to its risk-weighted credit.
"We plan to seek to take over a non-banking business like a securities firm and
an insurer, as there is a need to change the group's business portfolio," Kim
Jung-hoe, president of KB Financial Group, said at an investor relations session.
Kookmin Bank contributes to about 96 percent out of the group's total earnings,
Kim added.
He also said the group still has an interest in buying Korea Exchange Bank,
controlled by U.S. buyout fund Lone Star Funds, adding that it is watching the
situation due to the current liquidity squeeze in the market.
The group also added that it and Kookmin Bank have no plans to give dividends
this year due to concerns that payouts could hurt its efforts to boost its
capital base.
sooyeon@yna.co.kr
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