---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 222565
conversation_id: 48f3226f-6d06-4393-a2ab-10e09456211b
citations: 13
created: 2026-05-31 21:40:42Z
---

# How does KB Financial’s valuation compare to peers, and what justifies its premium/discount?

# KB Financial: Valuation vs Peers, and What Justifies the Premium

CLSA's coverage explicitly anchors KB Financial as the **most expensive Korean bank, intentionally so** — and CLSA's view (Jongmin Shim, Seoul, CLSA parent) is that KB *deserves* a wider premium from here. CLSA's latest call (24-Apr-2025) is **High-Conviction Outperform, target ₩120,000** (from ₩105,000), with the target PE multiple lifted from 6.9x to **7.7x — explicitly framed as a 10% premium to +1sd of KB's past 10-year average PE**, a level CLSA assigns to no other bank in the universe [1][2][12].

---

## 1. Where KB Trades vs Korean Peers (1Q25 update, 17-Apr-2025 sector note)

Per the CLSA Korea banks comp table (Figure 14 of *Korea banks — Tariff hiccup*) [5]:

| Bank | 25CL PE | 26CL PE | 25CL PB | 25CL ROE | 25CL ROA | 25CL Div Yield |
|---|---|---|---|---|---|---|
| **KB Financial (105560)** | **5.48x** | **5.25x** | **0.48x** | **9.36%** | **0.74%** | **4.28%** |
| Shinhan (055550) | 4.97x | 4.53x | 0.42x | 9.13% | 0.66% | 4.77% |
| Hana Financial (086790) | 4.44x | 4.46x | 0.40x | 9.43% | 0.58% | 6.41% |
| Woori Financial (316140) | 3.77x | 3.66x | 0.34x | 9.22% | 0.62% | 8.52% |
| IBK (024110) | 4.32x | 3.96x | 0.38x | 8.90% | 0.56% | 8.29% |
| BNK Financial (138930) | 3.82x | 3.04x | 0.30x | 8.16% | 0.51% | 7.94% |
| iM Financial (139130) | 3.04x | 2.80x | 0.28x | 9.56% | 0.50% | 8.11% |

**KB trades at a clear 10–80% PE premium and a 14–70% PB premium vs the rest of the universe** — the only bank trading meaningfully above 5x forward PE [5]. KB also has the **lowest dividend yield in the group**, which is the mathematical signature of a premium-valued name. The trade-off is visible: yield-hunters get more cash payout from Hana/Woori/IBK/BNK; KB holders are paying up for compounding earnings and capital quality.

CLSA's recommendation/target-price board (Apr 2025): KB **HC O-PF** (TP ₩105,000→₩120,000); Shinhan **O-PF** (₩68,000, +44% upside); Hana **O-PF** (₩73,000, +27%); Woori **O-PF** (₩18,500, +12%); IBK **HLD** (₩14,000); BNK **HC O-PF** (₩13,500); iM **O-PF** upgrade (₩11,000) [11].

---

## 2. Where KB Trades vs Global Bank Peers (Figure 12, 17-Apr-2025) [6]

| Region | 25F PE | 25F PB | 25F ROE | 25F Div Yield |
|---|---|---|---|---|
| **KB Financial** | **5.4x** | **0.5x** | **9.5%** | **4.3%** |
| Korea average | 4.6x | 0.4x | 9.1% | 5.8% |
| China average (BoC, ICBC) | 5.2x | 0.5x | 9.2% | 6.0% |
| Japan average (MUFG/SMFG/Mizuho) | 9.9x | 0.9x | 8.9% | 3.8% |
| UK average (HSBC/Barclays) | 7.3x | 0.8x | 11.3% | 4.8% |
| US average (JPM/BAC/Citi) | 10.4x | 1.1x | 10.8% | 3.0% |
| Singapore average (DBS/UOB/OCBC) | 9.8x | 1.3x | 13.9% | 6.7% |
| Australia average (CBA/NAB/WBC/ANZ) | 17.2x | 2.0x | 11.1% | 4.8% |
| **Global ex-Korea avg** | **10.8x** | **1.2x** | **11.0%** | **4.8%** |

KB is the **most expensive Korean bank but still trades at roughly half the global ex-Korea multiple** — 5.4x PE vs 10.8x global, 0.5x PB vs 1.2x global, despite delivering an ROE (9.5%) close to global average (11.0%) [6]. The "Korea discount" is a sector-level phenomenon (regulation, capital captivity, lower TSR history); the "KB premium" is within Korea.

---

## 3. CLSA's Stated Justification for the Premium

CLSA explicitly assigns each Korean bank a target PE based on a 10-year historical anchor, then layers a premium/discount on top. The hierarchy reveals what is and isn't justified [7][13][8][9]:

| Bank | CLSA Target PE | Anchor | Rationale |
|---|---|---|---|
| **KB Financial** | **7.7x** (was 6.9x) | **10% premium to +1sd of 10y avg** | "KB deserves to trade at a higher valuation multiple… macro recovery + CVP + superior shareholder return" [2] |
| Shinhan | 6.9x | +1sd of 10y avg | Same CVP/macro logic — but **no 10% premium overlay** |
| Hana | 5.8x | +1sd of 10y avg | "Macro uncertainty and fintech-led competition will make it tough to reach 8x previous peak" [13] |
| BNK | 4.6x | 10y average | Catch-up play; deep discount since 2018 |
| Woori | 4.4x | 10y average | "30–40% discount vs peers" due to inorganic-growth uncertainty and lower CET1 [8] |
| IBK | 3.9x | Discount to 10y avg | Government-owned, "regulatory noise" [9] |
| iM Financial | 3.6x | Long-term avg | PF-loan overhang |

The **5 explicit drivers** of KB's premium, as stated in the notes:

### (a) **Superior CET1 ratio → larger shareholder return capacity**
KB's CET1 ratio of **13.67% at 1Q25** is the highest in the coverage. Management's two-stage shareholder-return plan returns *all* capital above 13% CET1 from the prior year-end (Phase 1) and capital above 13.5% during the year (Phase 2) [4]. This converts capital ratio leadership directly into incremental buybacks.

### (b) **TSR likely to hit ~50% in 2025 — three years ahead of peers**
KB raised its 2025 cash dividend by ₩100bn (to ₩1.34tn) at 1Q25 and announced an **unexpected ₩300bn buyback**, on top of the original program [1]. "We believe KB's TSR can reach 50% in 2025… This should lead to a widening valuation premium for KB, as management is properly utilising its superior capital ratio for shareholder returns." [3] Peers are targeting 50% TSR only by **2027** [1] — KB is effectively delivering the peers' three-year promise this year.

### (c) **Best-in-class profitability ratios**
KB has the **highest ROA in the group** (25CL ROA 0.74% vs 0.50–0.66% for peers) and one of the highest ROEs (9.36%) [5]. ROA is the cleanest profitability signal because it strips out leverage — KB is structurally more profitable per won of assets, driven by its non-banking subsidiaries (KB Securities, KB Card, KB Insurance, KB Capital).

### (d) **Strong 1Q25 operational delivery**
1Q25 NP of **₩1.7tn** beat consensus by 7%, with bank NIM **+4bps QoQ** on lower funding costs and an increase in low-cost deposits, SG&A down 1.4% YoY/22% QoQ, and **cost/income ratio at a historical-low ~35%** [4]. Earnings revisions: +2.4% (25CL) and +1.6% (26CL).

### (e) **Lower CET1 sensitivity to KRW weakness**
Among the big-four, **KB and Shinhan have the lowest CET1 sensitivity to USD/KRW moves**, so the won-weakness shock that worried investors in 4Q24/early 2025 does not derail KB's shareholder-return plan the way it might for Hana/Woori [10] (Figure 5, 2025 Outlook).

---

## 4. KB's Own Historical Valuation Context

CLSA's KB-specific charts show KB's own trailing PE band sits at **avg ~6.6x, +1sd ~7.0x, target now 7.7x** — i.e., CLSA is willing to pay 10% above the 10-year +1sd band, vs Shinhan/Hana which are only set at +1sd flat. KB's trailing PE compressed from ~12x (2005–07) to ~5x (2019–23) and is now re-rating toward 7x; PB has rebuilt from ~0.3x (2022) to ~0.5x (2025), with CLSA's PB anchor at ~0.7x [10][1].

---

## 5. Asymmetric Set-Up Embedded in the Premium

Even paying up for KB, CLSA's 25CL EPS of **₩14,951** at the 7.7x target multiple yields **₩115,123** — explicitly rounded to **₩120,000 target (+42% upside)** from the 24-Apr-2025 priced ₩84,500 reference [1][11]. The same valuation framework applied to Shinhan/Hana yields only +27% to +44% even at higher discounts to KB. The premium is "earned" in CLSA's view: KB pays out faster, has more capital to deploy, and has the lowest tail-risk on CET1.

---

## 6. Bottom Line

| Dimension | Reading |
|---|---|
| **KB's Korea-relative premium** | ~10% PE premium, ~14% PB premium vs Shinhan; up to ~80% vs iM. CLSA: "deserved" [2] |
| **KB's global discount** | Trades at ~half the global ex-Korea multiple (5.4x vs 10.8x PE) — Korea sector-level discount [6] |
| **Primary justification** | Superior CET1 (13.67%) + earliest 50% TSR achievement + best-in-group ROA (0.74%) + lower KRW sensitivity [1][3][4] |
| **CLSA target valuation** | 7.7x PE = **10% premium to +1sd of 10-year average** — unique to KB in the coverage [2] |
| **Risk to the premium** | Heavy government regulation of Korean banks (national service contributions), domestic credit-cost surprise on macro slowdown, regulator pushback on excess capital return [9] |
| **CLSA recommendation** | High-Conviction Outperform, TP ₩120,000 (+42% upside from 24-Apr-2025) [1][11] |

The premium is **paid for** (KB does have the lowest dividend yield) but **justified** in CLSA's framework by capital surplus that translates into earlier and larger buyback/cancellation — which is the dominant share-price driver in the current Korean bank re-rating cycle.

---

**Sources**
[1] *KB Financial — HC O-PF (Classy leader)* — CLSA, Jongmin Shim, 24 Apr 2025 — 607956820LinqAlpha.PDF
[2] *KB Financial — HC O-PF (Classy leader)* — CLSA, 24 Apr 2025 — 607956820LinqAlpha.PDF (valuation details)
[3] *KB Financial — HC O-PF (Classy leader)* — CLSA, 24 Apr 2025 — 607956820LinqAlpha.PDF (50% TSR for 2025)
[4] *KB Financial — HC O-PF (Classy leader)* — CLSA, 24 Apr 2025 — 607956820LinqAlpha.PDF (1Q25 review)
[5] *Korea banks (Tariff hiccup)* — CLSA, Jongmin Shim, 17 Apr 2025 — 607956213LinqAlpha.PDF (Figure 14 peer valuation)
[6] *Korea banks (Tariff hiccup)* — CLSA, 17 Apr 2025 — 607956213LinqAlpha.PDF (Figure 12 global banks comp)
[7] *Korea banks (Tariff hiccup)* — CLSA, 17 Apr 2025 — 607956213LinqAlpha.PDF (KB valuation rationale)
[8] *Korea banks (Tariff hiccup)* — CLSA, 17 Apr 2025 — 607956213LinqAlpha.PDF (Woori valuation rationale)
[9] *Korea banks (Tariff hiccup)* — CLSA, 17 Apr 2025 — 607956213LinqAlpha.PDF (IBK government-discount rationale)
[10] *Korea banks (2025 Outlook: Further rerating, redux)* — CLSA, 7 Jan 2025 — 607947659LinqAlpha.PDF (Figure 29 universe valuation)
[11] *Korea banks (Tariff hiccup)* — CLSA, 17 Apr 2025 — 607956213LinqAlpha.PDF (rec/TP summary)
[12] *KB Financial — HC O-PF (Classy leader)* — CLSA, 24 Apr 2025 — 607956820LinqAlpha.PDF (Figure 17 — TP/multiple change table)
[13] *Korea banks (Tariff hiccup)* — CLSA, 17 Apr 2025 — 607956213LinqAlpha.PDF (Hana valuation rationale)

## Citations

- [1] **607956820LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956820LinqAlpha.PDF>
- [2] **607956820LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956820LinqAlpha.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] **607956213LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956213LinqAlpha.PDF>
- [6] **607956213LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956213LinqAlpha.PDF>
- [7] **607956213LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956213LinqAlpha.PDF>
- [8] **607956213LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956213LinqAlpha.PDF>
- [9] **607956213LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956213LinqAlpha.PDF>
- [10] **607947659LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/01/607947659LinqAlpha.PDF>
- [11] **607956213LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956213LinqAlpha.PDF>
- [12] **607956820LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956820LinqAlpha.PDF>
- [13] **607956213LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956213LinqAlpha.PDF>

