We will now begin the 2024 full year business presentation. Thank you very much for participating in today's earnings release. At today's earnings release, we have here with us executives from the group, including Managing Director and CFO, Sang-Rok Na. First, our Group CFO will cover 2024 major earnings results. And after that, we will engage in a Q&A session. Please note that from this presentation after our real time Q&A session, we have set aside additional time for the management team to answer questions that were previously submitted by our shareholders to our website. I will now invite our group CFO to walk us through 2024 full year business results.

Good afternoon. I am Na Sang-Rok, CFO of KB Financial Group. Thank you all for joining KBFG's earnings presentation for FY 2024. Before going into earnings results, I will first run through business highlights. As concerns over household debt and the real estate market persisted in 2024, recent financial market volatilities expand on the back of major countries' monetary policy stance, U.S. presidential election and surge in the FX rate. For banking, in particular, rate cut cycle eroded profitability and there were rising concerns on asset quality due to a slump in real economy and ELS related compensation booked at the start of the year exerted a downward pressure on bottom-line. Despite all this, net profit for the year reported more than KRW 5 trillion, sustaining a solid profit uptrend for the group. These results are meaningful in that despite a structural difficulty of profitability declines, concerns on soundness and heightened economic uncertainties, our fundamentals have proven solid on the back of business portfolio diversification efforts that we have placed over the years. Also, 2024 can be regarded as the inaugural year of value up, as we placed emphasis on sustainability and predictability based on which we announced Sustainable Value-Up Plan last October embodying KB's philosophy, which was met with positive market reaction. We were the first to implement share buyback and cancellation in the sector and introduced equal quarterly dividend distribution based on total payout, which shows KBFG is leading market in shareholder return and has continued to develop such policies, thereby laying a fertile ground. Underpinned by this foundation, I would like to emphasize yet again that we will implement KB's Value-Up Plan firmly with no interruptions. From next page onwards, I will walk through KBFG's performance highlights for 2024. Firstly, KBFG's FY '24 net profit was KRW…

Thank you for the presentation. We will now begin the Q&A. For those of you joining through the Internet, please refer to the contact information on the very last page of the presentation screen. And for those of you using the phone [Operator Instructions] From Hanwha Investment Securities, Kim Do Ha. Please go ahead.

Thank you very much for taking my question. I would like to first get an insight on the guidance for your growth and margin. And the second question, I believe that these questions are upcoming. But if you look at CET1 ratio, in light of the FX sensitivity that we understand, even if the Korean won was weak, the CET1 ratio was lower than what we had expected. And so I think the outcome of the share buyback was less. And I think the RWA increase was not mainly attributable to the bank. So what were the key levers? And can we understand the FX sensitivity on a dollar basis? And in terms of our shareholder return policy, the CET ratio of the year-end and midyear is going to be quite important. And I know that in order for you to control the year-end CET ratio, I mean, did you endeavor to do so? Because if you compare to other companies, we were able to see that there were a lot of efforts put in to really defend the CET1 ratio at the end of the year because the timing is an important factor. So of course, I'm not recommending that you arbitrarily do asset rebalancing in order to defend CET1. But having said that, that year-end CET1 is quite important. So on a year-end basis and midyear basis, for you to control CET1 ratio, do you have intention to really focus on controlling that number through any specific policies?

Thank you for that question. Just give us one moment before we answer your question.

Hello, I am CFO, Na Sang-Rok. Thank you very much for the question. Regarding the guidance on growth and margin, first, if you look at growth on a nominal GDP basis, that will be our key benchmark against which we will manage our growth. Basically, on a quarterly basis we want to minimize the variability from one quarter to the next. So we want to be able to achieve a steady growth. Now the market is looking about 1 or 2 or 3 basis point decline. If you look at the secular trend, the decline in margin seems inevitable because of the rate cut cycle that we’re in. However, we want to make sure that the volatility on the asset side is minimized and so that we can save on the funding cost and not just interest, but we want to be able to narrow any fluctuations or the big fluctuations that we've seen in the NIM. For CET1 ratio, if you look at Q4 the FX impact was quite sizable. So as you mentioned last year, KRW 10, the sensitivity is about 2 basis points for every KRW 10. In Q4, there's been a decline in profit and also with cash dividend payout in Q4. On top of that, we had a share buyback and cancellation of more than KRW 100 billion. So the plus impact has been off-setted because of these levers. Now FX increase had impacted an increase in RWA, which lowered the CET1 ratio. Now as you've mentioned, we are not arbitrarily going to bring down the asset growth for Q3 and Q4 to keep to a certain number because that is going to impact our earnings capability in a negative way. We want to minimize the volatility and fluctuation as much as possible from one quarter to the next. So if you take a look at our Value-Up Plan at the midyear and year-end, yes, those are very important timing. Shareholder return is not just going to end with one single point. Basically, there is going to be sustainable shareholder return that is ongoing. So rather than arbitrarily cutting the level of asset, we want to make sure that we achieve steady growth of asset and striking a right balance between shareholder return and that asset growth. We felt that was important because if we try to increase this number arbitrarily at the end of the year, then that is going to work as a pressure on the shareholder return at the end of the day. So from a first half basis, 13.51% CET ratio is what we've seen. We believe that we will be able to increase inch that up more as we go forward. I hope that answered your question.

Thank you very much for the answer. We don't have any questions in the queue as of now, so we will wait. We will take the next question from HSBC Securities. We have Won Jaewoong on the line.

Can you hear me?

Yes, we can hear you well.

Thank you very much for the good performance despite the difficult environment. I have two questions. The first question is about the shareholder return Value-Up because when you announced those plans, you mentioned that in the first half, if it exceeds 13% for that excess capital, you would use all of that for shareholder return. And after that, in the second half, there would be the amount exceeding 13.5%. That excess capital would be utilized for shareholder return. And there is some confusion on our part. So I would like a more clearer understanding because I think with the profits that have increased, CET1 increase, it could be 0.2% or 0.3% per quarter. So in Q2, so when you have the earnings presentation in July, well based on that, if it goes -- exceeds 13.5%, will that be used for shareholder return? Or after Q3 in September, if you look at the trend and if you had lower results in Q2, but if it goes beyond 13.5% at that time, would you be more flexible and let us know about the results. So is this a rigid schedule? Or is it more flexible in your approach according to the different circumstances? And my second question is about loan growth forecast and CCR forecast as well. Thank you.

We will soon answer your question. Thank you.

I’d like to answer your questions, and thank you very much for your insightful questions. In the second half of this year for shareholder return, we will be quite flexible. We are not going to have a hard pinpoint in June, but we will see the situation, and there will be CET1 at the end of the year, and we will need to take that into consideration as well, as well as its repercussion. So we will be as flexible as possible. And for loan growth and CCR, I will ask our CRO of the Financial Holdings Group to answer that question. So I would like to invite [Mr. Jong Min Lee] (ph)

I am [Jong Min Lee] (ph) the CFO of the bank. And I would like to answer your question about growth. In 2025, considering profitability and asset quality, we will pursue appropriate growth centering on high-quality assets and also risk management. And we are expecting about 5% growth of the bank loan growth rate. And for household loans, through improving non-face-to-face loan process and dedicated product expansion, we will have growth portfolio based on non-face-to-face channel growth. And we will also have growth based on high-quality credit loans and mortgage loans that have profitability. So we expect about 4% of household loan growth rate considering the market situation. And for corporate loans, we will consider asset quality. So we will pursue about 6% of loan growth for corporate loans, and we will have control of the growth speed strategically of large corporations and have flexible growth considering the market opportunities. And for SME loans, we will have appropriate growth based on high-quality assets. And for SOHO, we will have growth and have portfolio diversification for different categories and regions. I am the CRO of the group. And thank you very much for your question related to CCR. For this year, like the previous year, the financial environment is slated to be quite subdued and economic outlook is not very good as well. So we will maintain our conservative provisioning stance as we had maintained. However, the CCR that we are expecting, we believe will be in line with the previous year about the mid-40 bps level.

Thank you. Next, Mr. Jeong Tae Joon from Mirae Asset. Please go ahead.

I am Jeong Tae Joon from Mirae Asset. Can you hear me okay?

Yes.

Thank you for taking my question. I have two questions. The first one is that the shareholder buyback that you've announced, is it same as relating to the first half figure? When you made the Q1 earnings presentation, basically, if the capital ratio is in excess of what you have shared, would there be additional share buyback? In Value-Up Plan that you have mentioned, you specifically talked about Phase 1 and Phase 2, but you now say that you're going to be quite flexible in paying out -- conducting share buybacks. So I would like to gain some more clarity on that. Second question is, when we calculate your TSR compared to last year, we think that the total shareholder return rate may go down on a year-over-year basis. Is this a possible scenario that we should be mindful of? Thank you.

Just give us one moment.

I'm the CFO. Responding to your question, based on Value-Up program, we have, yes, Phase 1, Phase 2, first and second leg. And my previous answer is that with regards to timing of that second return basically, it is on that aspect that we will be more flexible. In terms of TSR, compared to 2024, we expect TSR will rise in light of the year-end profit guidance and the CET1 ratio that we are projecting for the second half. And if we redo the calculation, we will definitely not scale back from where we were last year. So we expect there to be an increase. So just to add on that, Basically, we will make -- when we made the disclosure, it is 2 times. So the second is second half. This is -- this could be Q3, and it means the second half of the year. So thank you.

SK Securities, Yong Jin Seol. You are on the line. Please ask your question.

Thank you very much for the opportunity. I have a question related to insurance. Yes, with regards to the Insurance Reform Council regarding CSM and P&L in case, what impact does the recent rule change or rule revision have on these different indicators?

Give us one moment to respond to that question.

Yes. Thank you very much for the question. I will respond to your question. Out of all of the rule changes and regulatory changes, especially changes on the experience variance related assumption, basically in Q4, we applied the best estimate figure. So KB Insurance, basically, the CSM impact was around KRW 400 billion downwards. Mostly, it had to do with assumption changes relating to lab-supported product. Now basically, this means that compared to previous Q4, there has been quite a bit of a decline.

Thank you very much for your answer. We don't have any questions in the queue as of now, so we will wait. We have the next question. From Goldman Sachs, we have Park Sinyoung. Please ask your question.

Thank you for the opportunity. I'm Park Sinyoung from Goldman Sachs. You mentioned the CCR and the mid-40 bps level outlook in your previous answer. And in 2024, regarding additional provisioning burden that existed, it seems a little bit high. So on a recurring level, do you think this will actually climb? And if that is true, then can you give us your assumption in that background or the outlook? Thank you very much.

Well, I will explain about that in my answer. Regarding the mid-40 bps level, you mentioned that it may be a little bit of a burdensome level for us but we are seeing the economy recover and seems to be delaying and for real estate PF or for overseas CRE, it seems that there is a possibility that it could deteriorate. So that is why we have been preemptively provisioning, and we want to have additional pre-provisioning on a conservative basis. Of course, we will have some reversals for our previously accumulated provisioning, but we believe that we need to be ready and prepared for this year. So that is the background behind that.

Thank you. And you could understand it as a very conservative level of guidance of provisioning. And [indiscernible] from -- the next question, please.

Thank you very much for the question. My question also has to do with credit cost. In Q4, you are more conservative in provisioning. And in 2025, you've also mentioned that you would be conservative going forward. But if you look at the increase in provision in Q4, it wasn't by and large, a large margin. And you say that there are also factors that will drive reversals. So can you provide a little more detail relating to this? And the write-back of provisioning in Q4 had an impact on the overall size of the provision. So we would expect that the 40 basis points will start to go down. Basically, what are some of the one-off factors and this mid-40 basis point guidance that you have just shared, is it conservative as we stand? Or is this just an appropriate level of projection as of today?

Yes, let me respond to that. Regarding any one-off factors for the bank regarding real estate and valuation related, there were some write-backs, which was booked. 40 basis points. Your question is, is this a neutral projection? Or is it conservative? My answer to that is that we have taken a conservative stance. That 40 basis points is a conservative view that we have.

From NH Securities, we have a question from Jung Jun-Sup.

I'm Jung Jun-Sup from NH Securities. Thank you for the opportunity. Regarding loan growth guidance that you remarked on, you mentioned about 5% growth that you are thinking of. And I think it's a little bit higher than I had expected. So regarding RWA growth, do you think it will be a similar level? So I would like to know more about your rationale.

Regarding the 5%, well, it could be seen as a little bit high. But for household loans, well, it is similar to nominal growth rate of 4% is what we are expecting. And for corporate loans, we are expecting about 6% in-line with the previous year. So I don't think it could be seen as too high, but I think it will be appropriate thinking of the previous year and RWA growth rate about 4.5%. So it will be a little bit lower than the asset growth rate. Thank you.

We do not yet have any other people have asked to submit a question. If there are no additional questions, as I have guided at the very beginning, let us walk through the questions that we received from our shareholders before the start of today's conference call, but we will still wait a little more to see if there's anybody else who has questions. If there are no further questions, then why don't we move on to the questions that we received from shareholders. So there are three questions that we will be talking about today. The first one is some of the changes relating to the record date, the dividend record date of 2025. Second question is the cash dividend plan going forward. And last question is the timing and the size of share buyback and cancellation in 2025. There may be some overlap with what we have already mentioned, but I would still like to turn it over to our CFO to respond to these questions.

Yes. Regarding the quarterly dividend record date this year with the adoption of the capital markets at revision, in the past, basically, the record date was set as of end of March, June and September. But basically, we can change that to the date after the decision on dividend is made. So when we make quarterly earnings presentation, it is at that point in time, we will be able to announce a date on which we will be distributing the dividend. Regarding the cash payout, this year as well basically, we will continue to implement equal quarterly distribution. Last year, we have done about KRW 1.2 trillion of cash dividend payout. And according to this year's information, as you know, we have a total shareholder return amount. And if you subtract the share buyback and cancellation, the rest is going to be in the form of a cash dividend payout. So on a year-over-year basis, we believe there is going to be about KRW 40 billion increase, but nothing yet has been confirmed. But going forward, once we have the resolution by the BOD, we will be able to come back to you with more detail through disclosure. Another question was asked about when we will have the share buyback and cancellation for 2025. And we will have some changes according to CET1 results. And regarding the timing, as we had mentioned, we have first half and second half of the year. So there will be two rounds. And it will be basically two rounds. And in the second half, we will be more flexible, keeping an eye on the trend. Thank you very much.

We will conclude today's earnings release, and thank you very much for participating today.