Profile: KB Financial Group Inc (KB.N)

KB.N on New York Stock Exchange

27 Mar 2015
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KB Financial Group Inc. (KB Financial Group), incorporated on September 29, 2008, is a Korea-based financial holding company. The Company’s operations include Kookmin Bank, a commercial bank in Korea. Its subsidiaries collectively engage in a range of businesses, including commercial banking, credit cards, asset management, bancassurance, capital markets activities and international banking. On the asset side, KB Financial Group provides credit and related financial services to individuals, and small- and medium-sized enterprises, and to a lesser extent, to corporate customers. On the deposit side, it provides a range of deposit products and related services to both individuals and enterprises of all sizes. The Company provides these services predominantly through Kookmin Bank. The Company is organized into four major business segments: retail banking, credit card operations, corporate banking and capital markets. As of December 31, 2009, the Company operated a banking network of 1,197 branches.

Retail Banking

The Company’s retail banking activities consist primarily of lending and deposit-taking. It offers various loan products that target different segments of the population, with features tailored to each segment’s financial profile and other characteristics. Its retail loans consist of mortgage loans and other consumer loans. Mortgage loans are loans made to customers to finance home purchases, construction, improvements or rentals, and home equity loans are made to customers secured by their homes to ensure loan repayment. Other consumer loans are loans made to customers for any purpose (other than mortgage and home equity loans). These include overdraft loans, which are loans extended to customers to cover insufficient funds when they withdraw funds from their demand deposit accounts with the Company in excess of the amount in such accounts up to a limit established by the Company. Other consumer loans are primarily unsecured. The maximum term of mortgage loans is 35 years and the majority of its mortgage loans have long-term maturities, which may be renewed. Non-amortizing home equity loans have an initial maturity of one year, which may be extended on an annual basis for a maximum of five years. Home equity loans subject to amortization of principal may have a maximum term of up to 35 years.

The Company offers many deposit products that target different segments of its retail customer base, with features tailored to each segment’s financial profile, characteristics and needs, including demand deposits, time deposits, savings deposits, certificates of deposit and foreign currency deposits. The Company also offers deposits that provide the holder with preferential rights to housing subscriptions and eligibility for mortgage loans. These products include housing subscription time deposits, which are special-purpose time deposit accounts providing the holder with a preferential right to subscribe for new private apartment units under the Housing Law, and housing subscription installment savings deposits, which are monthly installment savings programs providing the holder with a preferential subscription right for new private apartment units under the Housing Law.

Credit Cards

The Company issues credit cards under the KB Card brand. The Company also offers revolving cards to individuals that allow outstanding amounts to be rolled over to subsequent payment periods. For installment purchases, it charges interest on unpaid installments at rates that vary according to the terms of repayment. As of December 31, 2009, it had approximately 10 million cardholders. The Company’s card revenues consist principally of cash advance fees, merchant fees, credit card installment fees, interest income from credit card loans, annual fees paid by cardholders, interest and fees on late payments, and with respect to revolving cards, interest and fees relating to revolving balances. Under non-exclusive license agreements with MasterCard International Incorporated and Visa International Service Association, the Company also issues MasterCard and Visa credit cards. The Company also issues debit cards. It also issues check cards, which are similar to debit cards except that check cards are accepted by all merchants that accept credit cards.

Corporate Banking

The Company lends to and takes deposits from small and medium-sized enterprises, and to a lesser extent, corporate customers. As of December 31, 2009, it had 220,407 small- and medium-sized enterprise borrowers and 941 corporate borrowers, for Won-currency loans. It receives fee revenue from cash management services offered to corporate customers, which include firm-banking services, such as inter-account transfers, transfers of funds from various branches and agencies of a company (such as insurance premium payments) to the account of the headquarters of such company and transfers of funds from various customers of a company to the main account of such company. Of its branch network, as of December 31, 2009, the Company had 101 branches dedicated exclusively to corporate banking (including eight branches that primarily handled large corporate banking). Its corporate deposit products can be divided into two general categories: demand deposits that have no restrictions on deposits or withdrawals, but which offer a relatively low interest rate, and deposits from which withdrawals are restricted for a period of time, but offer higher interest rates.

Capital Markets Activities and International Banking

Through its capital markets operations, the Company invests and trades in debt and equity securities, and to a lesser extent, engages in derivatives and asset securitization transactions and makes call loans. It also provides investment banking services to corporate customers. It invests in and trade securities for its own account in order to maintain adequate sources of liquidity, and to generate interest and dividend income and capital gains. Its investment portfolio consists primarily of held-to-maturity and available-for-sale securities. Its trading and investment portfolios consist primarily of Korean treasury securities and debt securities issued by Korean government agencies, local governments or certain government-invested enterprises and debt securities issued by financial institutions. From time to time, it also purchases equity securities for its securities portfolios.

KB Financial Group provides and trades a range of derivatives products, including Won interest rate swaps, cross-currency swaps, foreign exchange forwards and equity options on the KOSPI index. It operates in the Korean asset-backed securities market. The Company makes call loans and borrows call money in the short-term money market. The main focus of its investment banking operations is project finance and financial advisory services. Its principal investment banking services include project finance and financial advisory services for social overhead capital projects, such as highway, port, power, water and sewage projects; financing and financial advisory services for real estate development projects; structured finance, and financing for mergers and acquisitions. It engages in various international banking activities, including foreign exchange services and derivatives dealing, import and export-related services, offshore lending, syndicated loans and foreign currency securities investment. As of December 31, 2009, it acted as a trustee for 54 financial investment companies. It provides trust account management services for unspecified money trusts. Through KB Asset Management, it offers investment trust products to customers and manages the funds invested by them in investment trusts. As of December 31, 2009, its bancassurance business had alliances with 16 life insurance companies and nine non-life insurance companies, and offered 52 different products through its branch network.

Company Address

KB Financial Group Inc

84, Namdaemun-Ro, Jung-Gu
SEOUL     100845
P: +822.20737114
F: +822.20737114

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