KB Financial Q2 net falls 54 pct on lower margins

(ATTN: ADDS president's comment in para 16)
SEOUL, July 30 (Yonhap) -- KB Financial Group Inc., the parent of South Korea's
top lender Kookmin Bank, said Thursday its second-quarter earnings sank 54
percent from three months earlier on slumping interest margins.

Net profit stood at 109.9 billion won (US$88.9 million) in the April-June period,
compared with 238.3 billion won three months earlier, KB Financial said in a
regulatory filing. The bottom line was below a market consensus of 170 billion
won.
Revenue also plunged 45 percent on-quarter to 6.6 trillion won, with operating
profit plummeting 97 percent to 14.4 billion won, the company said.
Figures for on-year comparisons were not available as KB Financial, the nation's
No. 3 financial services company, went into operation in late September.
Shares of KB Financial closed 1.62 percent lower at 54,500 won on the Seoul
bourse. The results were released after the market closed.
"Slumping interest margins and still high loan-loss provisions were responsible
for the fall in second-quarter net income," a group official said.
The group's total assets amounted to 333 trillion won as of the end of June, 1.1
percent higher than end-March, it said.
The net income of Kookmin Bank, the group's flagship unit, surged 43 percent to
227.7 billion won in the second quarter from three months earlier due to one-time
factors, KB Financial said. Compared with a year earlier, however, earnings
tumbled 65 percent due to increased loss reserves.
The lender unloaded its stake in leading builder Hyundai Engineering &
Construction Co. in May and KB Life Insurance Co., raking in 137 billion won.
Kookmin Bank's net interest margin fell sharply in the three months as the Bank
of Korea's soft monetary policy drove down lending rates. The bank's interest
margin was 2.16 percent in the second quarter, down 0.54 percentage point from
the previous quarter.
Kookmin Bank put aside 556 billion won against risky loans and other losses in
the second quarter, compared with 685 billion won three months earlier.
As of the end of June, its capital adequacy ratio, the percentage of equity
capital to risk-weighted assets, was 13.65 percent, up from 13.16 percent three
months earlier.
The rate of non-performing loans, or lending overdue more than three months,
inched down 0.07 percentage point to 1.34 percent of the total loan, the group
said.
The financial company is gearing up to take over other financial firms as it
seeks to diversify its revenue sources, the group's president said.
"Shifting our portfolio through mergers and acquisitions is a life-or-death
issue, as KB Financial needs to stabilize its earnings," Kim Jung-hoe told
reporters. "KB Financial is interested in buying asset management firms with
stable profits rather than brokerages."
Touching on speculation the group is aiming to buy Korea Exchange Bank, the
fifth-largest lender in South Korea, Kim said, "Now is not the right time to
consider such a matter."
pbr@yna.co.kr
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