Kookmin Bank

The stable outlook on Kookmin reflects our view that the bank will maintain its adequate capitalization over the next 18-24 months, backed by a moderate growth appetite and improving profitability. We believe the bank's efforts to manage risks and maintain adequate underwriting standards will help mitigate some pressure on asset quality and credit costs amid rising domestic interest rates. In addition, Kookmin will likely maintain stable funding and liquidity profiles, backed by its solid nationwide customer base. We could lower our ratings on Kookmin if: (1) the bank's capitalization weakens considerably, dragging the risk-adjusted capital (RAC) ratio sustainably below 7%, potentially due to rapid business growth or support for the parent group, KBFG, through excessive dividends; or (2) the bank's

...Kookmin Bank's earnings capacity to absorb potential credit losses will likely increase. Rising domestic interest rates will continue to drive the expansion in the bank's net interest margins (NIM), which will lead to overall profitability improvement over the next two years. We expect Kookmin's loan growth prospects to be moderate, considering declining credit demand and the bank's focus on risk management amid rising domestic interest rates, along with stricter regulatory guidelines on household lending such as debt servicing to income ratio. This will enable the bank to maintain an adequate capital buffer. Kookmin's adequate underwriting standards and risk management will alleviate some asset quality pressure. We believe the bank will prioritize credit risk management to mitigate downside risks to asset quality from rising domestic interest rates. Kookmin has a diversified loan portfolio with limited exposure to cyclical large corporate sectors, and its loans to small and midsize enterprises...

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