DEEP RESEARCH · KB FINANCIAL GROUP

KB Financial Group Deep Dive & Korea Top Pick

In the Value-Up era, which Korean financial holding has the most compelling investment case?

Published: 2025-09-13 · Company + sector top-pick research · Original Naver Blog post

0. Bottom line first

• Non-bank contribution 42% (1Q'25) — #1 among the top 5 holdings, well ahead of Shinhan 29.1% and Hana 16.3%.
• Capital: CET1 13.74% (June 2025) above Shinhan 13.59%, Hana 13.39%, Woori 12.82%. Explicit rule: "capital above 13.5% CET1 is shareholder-return funding."
• Shareholder return: 2025E total payout ratio 53% — vs Shinhan/Hana in the 40s and Woori in the 30s.
• Digital: group platform MAU ~30 million; KB Star Banking alone 13 million — #1 among holdings.
• Risk: NPL 0.72%, coverage 138.5% (Kookmin Bank 189.1%) — vs peers in the low 100s.

Glossary

• NIM: yield on assets minus funding cost over interest-earning assets. Core bank-profitability gauge.
• ROA: net income / total assets — operating efficiency.
• ROE: net income / equity — return on shareholders' capital.
• CET1: common equity Tier 1 ratio. Stress absorption + shareholder-return headroom.
• NPL: loans 90+ days past due (substandard or worse).
• NPL coverage: loan-loss reserves / NPLs. >100% = sufficient buffer.
• LCR: high-quality liquid assets vs 30-day stress outflows.
• PBR: price / book value. <1× means trading below liquidation value.
• Corporate Value-Up Program: Korean government policy pushing companies to voluntarily disclose plans to raise PBR/ROE and shareholder return, addressing the "Korea discount."

Part I · KB Financial Group Deep Dive

1. Diversified profit engine

1.1 Dominant non-bank contribution

Under Chairman Yang Jong-hee, strengthening non-bank has been the strategic core. 1Q'25 non-bank contribution 42% — #1 among the top 5 holdings, well above Shinhan 29.1% and Hana 16.3%. Even amid 2024-1H ELS loss compensations, non-bank near 40% kept group earnings on track.

1.2 Core subsidiaries

1.3 Quality of revenue mix

2024 group fee income KRW 3.85 tn (+4.8% YoY). Non-bank share of fee income rose from 67.6% (2023) → 70.6% (2024). The bank's deposit base + low-cost funding fuels high-margin non-bank fees — KB's distinctive flywheel.

2. Fortress financial soundness

2.1 Best-in-class capital

Official fact: As of June 2025, KB CET1 13.74%, BIS 16.36% — above Shinhan 13.59%, Hana 13.39%, Woori 12.82%.

Interpretation: KB's explicit rule that "capital above 13.5% CET1 is shareholder-return funding" turns the capital ratio from a risk metric into a leading indicator of payout. That predictability cuts the equity-risk premium.

2.2 Pre-emptive risk management

June-2025 NPL ratio 0.72%; NPL coverage group 138.5%, Kookmin Bank 189.1% — versus some peers in the low 100s.

2.3 Liquidity

Kookmin Bank LCR 107.61% at end-1Q'25, comfortably above the 100% regulatory floor.

3. Digital leadership — the "super app" play

• MAU #1: Group platform MAU ~30M; KB Star Banking 13M — gap to Shinhan widening.
• Economic moat: KB Star Banking integrates bank, securities, card and insurance into a one-stop experience.

Part II · Competitive analysis — the four holding companies

Table 1: Key metrics (1H 2025)

6. Profitability & soundness benchmark

1H'25 net profit leadership at KB. Non-bank 40%+ contribution buffers interest-rate cycle. NPL coverage 138.5% — sharp contrast with Hana's ~100%.

7. Digital and shareholder return

#1 in group MAU → biggest platform-based future revenue potential. 2025 payout 53% vs Shinhan/Hana 40s, Woori 30s — directly driven by capital strength (CET1 13.74%).

8. Investment conclusion — sector top pick

Part III · Top Pick for the next three years

9. The Value-Up Program — structural shift

Government policy to dismantle the "Korea discount" through PBR/ROE improvement and stronger payouts. Structural tailwind for historically low-PBR financials. Companies with concrete execution and results will lead.

10. Top Pick — KB Financial Group

1. Value-Up flagship: first listed company to pre-announce a corporate-value-up plan, presented concrete execution, and was awarded the Deputy Prime Minister's "Value-Up Outstanding Company" prize. Value-Up flows in here first.
2. Capital-driven shareholder return: CET1 13.74% supports a stated 2025 total payout target above 50% — peers can't match without comparable capital.
3. Sustainable fundamentals: ▲most diversified portfolio, ▲#1 group MAU, ▲best-in-class NPL coverage — proven ability to generate and share profits in any cycle.

Final conclusion

The next three years are when Korean financials should shed the under-valuation. The company most aggressively executing Value-Up, most credibly committed to shareholder value, and backed by the strongest fundamentals — KB Financial Group — is our sector top pick.