---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 292163
conversation_id: af257ee1-0d04-49f4-8056-926013a3f40c
citations: 17
created: 2026-05-31 21:42:34Z
---

# Provide a one‑year narrative of KB Financial, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

# KB Financial Group (105560-KR) — A One-Year Narrative (May 2025 → May 2026)

Across the past twelve months KB Financial's story was driven by three reinforcing forces: **a more aggressive, CET1-anchored shareholder-return formula that the market finally believed**; **earnings resilience that comfortably out-funded that formula**; and **a once-in-a-cycle Korean macro / policy backdrop** (presidential transition, Value-Up Program acceleration, commercial-code reform, and a separate-taxation push on dividend income). The combined effect was a sharp PBR rerating from a deep-discount sector laggard valuation toward the ~0.8x PBR level — what management itself called the threshold where the buyback-vs-dividend mix should pivot.

---

## 1. Setting the scene — entering the period as the sector's "preferred pick"

CLSA had entered 2025 with an **Overweight stance on Korean banks** in its January 2025 outlook, arguing banks committed to "more buybacks and cancellations" — explicitly including KB — could continue to "rerate towards 1x PB" with commercial banks generating 9–10% ROEs. KB was already singled out as the preferred name. By **February 2025**, after 4Q24 results (**NP KRW683bn, in-line; ₩1.76tn shareholder return announced, CET1 13.51%**), the broker reiterated Outperform with a **₩115,000 target price**, flagging upside risk to CET1 once the FX hit from a weak won normalised, and predicting a **2H25 buyback of ₩700bn or higher** [1].

The April 3, 2025 note ("**Further rerating to come**") was the more decisive call: CLSA **upgraded KB to High-Conviction Outperform**, framing the YTD price correction (the market had grown anxious that KB's RWA-discipline guidance would cap buyback size versus peers) as **an attractive entry point**, with KB's industry-high CET1 ratio destined to fund a higher-than-peer TSR [2].

> The 12-month price band at this point: **₩101,200 high / ₩69,300 low**, with a foreign holding of **74.8%** and NPS / Capital Group as the two largest shareholders at 8.4% and 7.9% [7].

---

## 2. 1Q25 — the "Classy leader" inflection (results released 24-Apr-2025)

The 1Q25 print was the moment sentiment broke decisively positive:

| Metric | 1Q25 | YoY |
|---|---|---|
| Net profit | KRW 1,697.3 bn | +63% |
| Group ROE | 13.04% | — |
| CET1 ratio | 13.67% | +14 bps QoQ |
| Q1 DPS | KRW 912 | +KRW 108 vs prior Q |
| Q1 buyback | KRW 300 bn (announced) | — |
| Total 2025 cash dividend | raised to KRW 1.34 tn | from KRW 1.24 tn |

Management said the **KRW 400 bn of value-up actions was preemptively front-loaded into 1H** to anchor predictability in volatile markets [6][7-tfs]. CLSA's verdict was unambiguous: KB beat consensus by 7% on stronger NIM and tight cost control, surprised positively on shareholder returns, and could **reach a 50% TSR in 2025CL — well ahead of peers planning to hit 50% only by 2027**; the broker **raised TP from ₩105,000 to ₩120,000**, lifted target PE from 6.9x to 7.7x, and reiterated **High-Conviction Outperform** [3][4].

This established the first key narrative leg: KB was no longer a "wait-and-see" name; it was the **bank others were now being benchmarked against** on capital return.

---

## 3. May–June 2025 — political reset turbocharges the Korea rerating

The macro backdrop transformed during the period:

- A snap presidential election after months of political turbulence saw **Lee Jae-myung elected as the 21st president on 3 June 2025**, prompting a series of CLSA strategy pieces titled "Political K-drama," "Who's leading the polls?", "Commercial code change key catalyst," and "Jaemyung Lee, the 21st president," with KB carried as a top pick across them.
- By the **18 June 2025 "Early innings of a rerating"** note, CLSA's view was that the post-April Kospi rally was **not a rerating but a normalisation of "deeply discounted valuations"**, with KB Financial held in the document's headline picks alongside SK Hynix, Hyundai E&C, SK INC and Meritz Financial — the structural argument being that productive-finance and capital-market policy would re-route household savings out of property and into equities.

Although the corpus's CLSA notes stop in **mid-June 2025** (latest published CLSA file on KB is the 18-Jun-2025 strategy piece), KBFG's subsequent earnings calls confirm management was leaning hard into the same regime change — repeatedly citing the "capital market revitalization" policy stance, productive-finance support, and the proposed **separate taxation of dividend income** as a regime catalyst that would let the firm tilt its return mix toward higher cash dividends.

---

## 4. 2Q25 / 1H25 — execution catches up to the narrative (results released 24-Jul-2025)

| Metric | 2Q25 | 1H25 |
|---|---|---|
| Net profit | KRW 1,738.4 bn | KRW 3,435.7 bn |
| ROE (1H) | — | 13.03% |
| CET1 | — | 13.74% (Jun-end) |
| RWA growth (YTD) | — | +2.4% |
| Bank NIM | 1.73% (-3 bps QoQ) | — |
| Group net fee income (Q2) | KRW 1,032 bn | first quarter ever above KRW 1 tn |

Net profit was up **23.8% YoY in 1H25** [8], with non-bank contributing 39% of 1H profit. Management announced the H2 return package: **KRW 920 DPS**, plus a **KRW 660 bn buyback within distributable profit** and a deferred KRW 190 bn to be returned at year-end book closing — explicitly because, in management's own words, KB had **"exceeded the profit available for dividend payout"**, an unprecedented constraint that itself signalled how aggressive the return formula had become. **Total 2025 shareholder return guidance was set at KRW 3.01 tn**, a "significant" YoY increase [9].

Forensic point worth flagging: bank NIM contracted 3 bps QoQ on the rate-cut cycle but **group NIM stayed at 1.96%** thanks to fee-income strength; this is the divergence that would matter for the 2H valuation story — the *quality* of the earnings base improved even as raw spread income compressed.

---

## 5. 3Q25 — silent compounding (results released 30-Oct-2025)

3Q25 NP came in at **KRW 1,686 bn** with 9M cumulative profit up **16.6% YoY**. **CET1 hit 13.83%** (highest in industry) even after a KRW 48 won depreciation against the dollar created a ~KRW 10 tn FX-related RWA tailwind. The board approved a **Q3 DPS of KRW 931**, **KRW 135 higher YoY** thanks to the larger total-dividend pool and the cancellation impact of buybacks [10]. Bank NIM stabilised at 1.74%; group NIM held at 1.96%; cumulative CIR was 37.2%.

By this point the firm was demonstrating the third pillar of the rerating thesis: **fee income compounding**, with KB Securities net fee income +16.5% YoY and KB Asset Management +23.3% YoY 9M — directly leveraged to the Korea capital-market revival.

---

## 6. FY25 — the rerating crystallises (results released early Feb 2026)

The full-year print confirmed the regime change:

| FY25 metric | Value | YoY |
|---|---|---|
| Net profit | KRW 5.843 tn | ~+20% |
| Group ROE | 10.86% | +1.0 pp |
| Basic EPS | KRW 15,437 | ~+20% |
| CET1 ratio | 13.79% | maintained |
| RWA | KRW 358 tn | +3.3% YoY (in-target) |
| CIR | 39.3% | first-ever sub-40% (FY-basis) |

[11]

The shareholder-return reveal was where investor sentiment really ratcheted higher:

- **Year-end DPS of KRW 1,651/share**, total YE cash dividend **KRW 575.5 bn**
- **2025 total cash dividend: KRW 1.580 tn — +32% YoY**
- **2025 total DPS (incl. quarterly): KRW 4,367 — +37.6% YoY**
- **2025 total shareholder return ratio: 52.4% — +12.6 pp YoY**, "industry-leading in both ratio and scale"
- Management explicitly tied the upsized year-end dividend to **PBR having "recently surpassed 0.8 multiple"**, triggering KBFG's own framework rule (lower PBR → more buyback; higher PBR → more cash dividend) [12]

Critically, management used the FY25 call to **front-load 2026 returns**: a **KRW 2.820 tn 1H26 shareholder-return package** announced — equivalent to **92% of all of 2025's return on day one** — split into KRW 1.620 tn of total cash dividends and **KRW 1.200 tn of buybacks (two KRW 600 bn tranches)**, with the first KRW 600 bn launching immediately after the earnings release [13]. The firm also flagged it was actively reviewing tax-exempt dividend procedures for GSM submission — a direct response to the new dividend-income separate-taxation policy.

---

## 7. 1Q26 — confirmation, not slowdown (results released 23-Apr-2026)

The 1Q26 print continued the rerating narrative rather than challenging it:

| Metric | 1Q26 | Comment |
|---|---|---|
| Operating profit | **KRW 2.728 tn** | **vs StreetAccount consensus KRW 2.443 tn — ~12% beat** [15] |
| Q1 DPS | **KRW 1,143** | **+25% YoY** vs prior-year KRW 912 [16] |
| Q1 buyback | **KRW 600 bn**, 24-Apr → 20-Jul 2026 [17] | First of the two announced tranches |
| Group CIR | 35.4% | All-time-low territory continues |
| CET1 ratio | 13.63% | -19 bps QoQ on **~KRW 80 won depreciation** and front-loaded returns [14] |
| RWA | KRW 366 tn | +2.5% YTD (only +1.1% ex-FX) [14] |
| Provision for credit losses | KRW 493.2 bn | **-24.8% YoY** |

The CET1 step-down looked optically alarming but management's framing was telling: the ratio "decreased by approximately 19 basis points Q-o-Q" *despite* an ~KRW 80 won move and large 1H26 returns at the start of the year [14] — which actually validates the formula's robustness, since shareholder returns are linked back to *end-of-1H* CET1.

---

## 8. How market valuation moved

The numbers from CLSA's price-target sheets and StreetAccount tag the share-price arc concretely:

- **Feb 5, 2025** anchor: TP ₩115,000 at +26% potential ⇒ ~₩91,200 spot, with 12M high/low ₩101,200 / ₩69,300 [1]
- **Apr 3, 2025** anchor: same TP ₩115,000 but now +49% potential ⇒ stock had derated to ~**₩77,200** on RWA fears — the moment CLSA upgraded to High-Conviction OPF [2]
- **Apr 24, 2025** anchor: TP raised to **₩120,000** at +42% potential ⇒ ~**₩84,500** spot post-1Q25 beat [5][7]
- **Apr 21–23, 2026** (1Q26 results window): tag prices on StreetAccount run-ups quote spot at **~₩157,200–₩160,400** — i.e., the stock roughly **doubled** from the April 2025 trough and was now trading well above the original ₩115,000 target, materialising the "early innings of a rerating" thesis. PBR had crossed the 0.8x line per management's own admission on the FY25 call [12].

---

## 9. Investor sentiment arc — five inflection beats

1. **Late-2024 / early 2025**: KB priced as "good but not differentiated" within the sector rerating that began with the Jan-2024 Value-Up Program (KRX Banks Index +22% in 2024). Cited as preferred pick but TP unchanged at ₩115,000 [1].
2. **Jan–Mar 2025**: Sharp correction (-15-20% from year-end highs) as the market questioned whether KB's measured RWA discipline could actually deliver higher TSR than peers who had front-loaded surprise buybacks. CLSA argued the move was overdone and **upgraded to HC O-PF** on April 3 [2].
3. **24-Apr-2025 (1Q25 beat)**: Surprise KRW 300 bn buyback + raised total dividend re-anchored sentiment. CLSA's "Classy leader" tag stuck; TP raised to ₩120,000; KB now the "name peers are chasing" [3][4].
4. **3-Jun-2025 onwards**: Lee administration's pro-capital-market policy stack (commercial code change, productive finance, separate dividend taxation) shifted the *whole* Korean financials complex from "discount" to "normalisation" frame. KB carried as headline pick across CLSA's strategy series.
5. **FY25 results (Feb 2026) + 1Q26 print**: Execution-driven phase — KRW 5.84 tn NP, 52.4% TSR ratio, KRW 2.82 tn 1H26 package, 1Q26 op profit 12% above consensus, dividend +25% YoY. PBR crosses 0.8x → mix pivots toward cash dividend, which is itself a maturation signal: the rerating thesis is no longer "more buyback per share" but "more sustainable yield."

---

## 10. The forensic check — what does *not* fit the bull case

The narrative is overwhelmingly positive but a complete read demands surfacing the friction points:

- **Bank NIM compressed across the year** (1.73% → 1.74% → 1.75%) under the rate-cut cycle. The rerating is being carried by **fee income (capital-market subsidiaries), cost discipline, and falling credit costs** — *not* by spread income.
- **FY25 ROE of 10.86%** is robust but well below the 13.04% reported on the *quarterly* 1Q25 ROE figure [6] — the gap reflects 4Q25 seasonality (KRW 248 bn group-wide ERP charge, ELS-related penalty provisioning, insurance seasonality) and serves as a reminder that headline net-profit figures contain meaningful one-offs in both directions.
- **CET1 step-down in 1Q26** (-19 bps to 13.63%), driven mostly by won weakness, demonstrates that the formula's central input is FX-sensitive — a tail-risk to the 2H buyback funding if the won weakens materially.
- The 2025 cumulative provisioning stance remained "conservative across all subsidiaries" despite better asset-quality indicators — management is deliberately under-releasing reserves to preserve a buffer against "potential economic volatility." That is prudent, but it is also a quiet earnings-quality reserve that will *not* be released absent a clear deterioration scenario.

---

## 11. Bottom line

Over the past year, KB Financial transitioned from "best-positioned sector laggard" to **the lead vehicle for Korea's Value-Up rerating**. The combination of (i) an industry-high and resilient CET1 ratio, (ii) a transparent, formula-bound shareholder-return policy, (iii) a fee-income engine increasingly leveraged to the Lee-era capital-market revival, and (iv) macro/political tailwinds (commercial-code reform, separate dividend taxation) compounded into a roughly **2x share-price move**, a **PBR crossing the 0.8x management-defined threshold**, and a **52.4% TSR ratio** in FY25. The 1Q26 print — beating consensus by ~12%, with a +25% YoY dividend and the first KRW 600 bn buyback tranche launching the day of the release — validates rather than challenges the thesis: the rerating is moving from buyback-driven to yield-driven, which is the natural maturation path management explicitly signalled.

---

**Sources**

[1] KB Financial – O-PF (More buybacks to come in 2H25) — CLSA, 5 Feb 2025 — 607949771LinqAlpha.PDF
[2] KB Financial – HC O-PF (Further rerating to come) — CLSA, 3 Apr 2025 — 607954974LinqAlpha.PDF
[3] KB Financial – HC O-PF (Classy leader) — CLSA, 24 Apr 2025 — 607956820LinqAlpha.PDF
[4] KB Financial – HC O-PF (Classy leader) — CLSA, 24 Apr 2025 — 607956820LinqAlpha.PDF (1Q25 detail / 50% TSR)
[5] KB Financial – HC O-PF (Classy leader) — CLSA, 24 Apr 2025 — 607956820LinqAlpha.PDF (valuation snapshot)
[6] Q1 2025 KB Financial Group Inc. — Earnings call transcript (23-Apr-2025) — KRW 1,697.3 bn NP, ROE 13.04%, CET1 13.67%
[7] Q1 2025 KB Financial Group Inc. — Earnings call transcript (23-Apr-2025) — DPS KRW 912, KRW 300 bn buyback
[8] Q2 2025 KB Financial Group Inc. — Earnings call transcript (24-Jul-2025) — Q2 NP KRW 1,738.4 bn, 1H NP KRW 3,435.7 bn, ROE 13.03%
[9] Q2 2025 KB Financial Group Inc. — Earnings call transcript (24-Jul-2025) — Total 2025 shareholder return KRW 3.01 tn
[10] Q3 2025 KB Financial Group Inc. — Earnings call transcript (30-Oct-2025) — DPS KRW 931, +KRW 135 YoY
[11] Q4 2025 KB Financial Group Inc. — Earnings call transcript (5-Feb-2026) — FY25 NP KRW 5.843 tn, ROE 10.86%, EPS KRW 15,437
[12] Q4 2025 KB Financial Group Inc. — Earnings call transcript (5-Feb-2026) — 2025 TSR ratio 52.4%, +12.6 pp YoY, PBR > 0.8x trigger
[13] Q4 2025 KB Financial Group Inc. — Earnings call transcript (5-Feb-2026) — 1H26 shareholder return KRW 2.82 tn, two KRW 600 bn buyback tranches
[14] Q1 2026 KB Financial Group Inc. — Earnings call transcript (23-Apr-2026) — CET1 13.63%, RWA KRW 366 tn, CIR 35.4%
[15] StreetAccount — KB Financial Q1 Operating profit KRW 2.728 T vs StreetAccount KRW 2.443 T (23-Apr-2026)
[16] StreetAccount — KB Financial declares Q1 dividend KRW 1,143/share; year-ago KRW 912/share (23-Apr-2026)
[17] StreetAccount — KB Financial to launch KRW 600.00 B buyback, 24-Apr through 20-Jul (23-Apr-2026)

## Citations

- [1] **607949771LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607949771LinqAlpha.PDF>
- [2] **607954974LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607954974LinqAlpha.PDF>
- [3] **607956820LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956820LinqAlpha.PDF>
- [4] **607956820LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956820LinqAlpha.PDF>
- [5] **607956820LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956820LinqAlpha.PDF>
- [6] **Q1 2025 KB Financial Group Inc.** · external
- [7] **Q1 2025 KB Financial Group Inc.** · external
- [8] **Q2 2025 KB Financial Group Inc.** · external
- [9] **Q2 2025 KB Financial Group Inc.** · external
- [10] **KB Financial Group, Inc., Q3 2025 Earnings Call, 30-October-2025 3** · external
- [11] **KB Financial Group, Inc., Q4 2025 Earnings Call, 5-February-2026 2** · external
- [12] **KB Financial Group, Inc., Q4 2025 Earnings Call, 5-February-2026 2** · external
- [13] **KB Financial Group, Inc., Q4 2025 Earnings Call, 5-February-2026 2** · external
- [14] **KB Financial Group, Inc., Q1 2026 Earnings Call, 23-April-2026 3** · external
- [15] **KB Financial reports Q1 Operating profit KRW2.728T vs StreetAccount KRW2.443T** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4636776&_doc_date=2026-04-23&_doc_product=SA>
- [16] **KB Financial declares Q1 dividend KRW1,143/share; year-ago figure was KRW912/share** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4636795&_doc_date=2026-04-23&_doc_product=SA>
- [17] **KB Financial to launch KRW600.00B buyback, to run from 24-Apr through 20-Jul** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4636798&_doc_date=2026-04-23&_doc_product=SA>

