KB Securities Co. Ltd.

The stable outlook on KB Securities reflects our view that KBFG will maintain adequate capital buffer over the next 18-24 months, backed by its steady profit generation and moderate asset growth. We also believe the group's focus on risk management and adequate underwriting standards will help mitigate some pressure on asset quality and credit costs. We expect KBFG to provide strong support to KB Securities under any foreseeable circumstances, considering the company's core importance to the group. The ratings on the company will therefore remain highly correlated with the group's creditworthiness. We could lower the ratings on KB Securities if: (1) the group's capitalization weakens, pushing down its risk-adjusted capital (RAC) ratio sustainably below 7%, potentially due to excessive business

...KB Securities Co. Ltd. will likely remain a core subsidiary of KBFG over at least the next two years. We view KB Securities as integral to the group, considering the revenue diversification and cross-selling benefits that the company brings to the group. The company is the second-largest operating subsidiary of the group, constituting about 12% of the group's equity as of end-2022. We believe KB Securities will maintain adequate capital buffer against potential losses. The company's modest asset growth prospects with a focus on risk management should support its capitalization over the next two years. KB Securities' profitability is unlikely to recover materially in 2023, after a deterioration in 2022. In our view, domestic stock market turnover, and equity and debt underwriting activities will remain sluggish as volatility in global and domestic financial markets will likely persist. We believe trading and valuation income on its fixed-income securities holdings are also unlikely to pick...

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