Bulletin: KB Financial Group's Provisioning Buffer To Cushion Asset Quality Strain

HONG KONG (S&P Global Ratings) April 27, 2023--KB Financial Group Inc.'s (KBFG) enhanced provisioning will strengthen its loss-absorption buffer. This will help the Korea-based group to withstand strain on asset quality amid difficult operating conditions. A rapid rise in interest rates in Korea has heightened financial burden on borrowers. Sizable additional loan loss provisions by KBFG (A/Stable/A-1) during the first quarter of 2023 will likely help it to absorb a rise in credit losses. The higher provisioning reflected more bearish macroeconomic assumptions and management overlays, primarily at Kookmin Bank (A+/Stable/A-1, the group's main operating subsidiary). Such additional provisions mainly contributed to a rise in annualized credit costs (measured by new loan loss provisions as a percentage of average gross loans)

...April 27, 2023 HONG KONG (S&P Global Ratings) April 27, 2023--KB Financial Group Inc.'s (KBFG) enhanced provisioning will strengthen its loss-absorption buffer. This will help the Korea-based group to withstand strain on asset quality amid difficult operating conditions. A rapid rise in interest rates in Korea has heightened financial burden on borrowers. Sizable additional loan loss provisions by KBFG (A/Stable/A-1) during the first quarter of 2023 will likely help it to absorb a rise in credit losses. The higher provisioning reflected more bearish macroeconomic assumptions and management overlays, primarily at Kookmin Bank (A+/Stable/A-1, the group's main operating subsidiary). Such additional provisions mainly contributed to a rise in annualized credit costs (measured by new loan loss provisions as a percentage of average gross loans) of the group to about 0.63% from about 0.13% in the same period a year ago. We do not expect a material deterioration in asset quality for KBFG's domestic...

Bulletin