Greetings. I am Peter Kwon, Head of the KBFG IR Division. We will now begin the 2025 Q1 Business Results Presentation. Thank you very much for participating in today's earnings release. We have here with us executives from the Group, including CFO, Sang-Rok Na. First, our Group CFO will cover 2025 Q1 major performance highlights. After that, we will have a Q&A session. Please note that like in the previous quarter, after our real-time Q&A session, we have set aside additional time for the management team to answer shareholders' questions. I will now invite our Group CFO to walk us through 2025 Q1 business results.

Greetings. I am KBFG CFO, Sang-Rok Na. Thank you for participating in our 2025 Q1 business results presentation. I will first touch upon Q1 key performance and major management indicators and give you more details for each category. In addition by applying the financial supervisory services response to our inquiry regarding insurance contract accounting treatment, we retrospectively restated financial results from 2024 Q1 to Q3. Please take this into consideration. Let's go to Page 1. In October of last year, we announced our clear roadmap regarding shareholder return. And this year, we are convinced that this will be a year when we will clearly demonstrate our group shareholder return policy. Even though concerns over global economic downturn are spreading, once again, KBFG focused on stable capital ratio management and continued robust profit-generating capacity. Most of all, March end CET1 ratio posted 13.67%, a 14 bp increase Q-o-Q, and we expect to maintain the industry's highest level of capital ratio. And we can say that this was a result of stable management of risk-weighted asset growth as well as efficient capital allocation. In addition, Q1 net profit posted KRW1.6973 trillion, and group ROE recorded 13.04% and is showing solid performance in all aspects of profitability and capital efficiency. Going forward, based on our capital management policy, focusing on CET1 ratio and strong earnings capacity, we'll keep the promise that we made with the market. Next is Page 2. On this page, I will once again explain about our shareholder value enhancement policy that the market is recently mostly interested in. As you are well aware, KBFG in October of last year, focusing on sustainability and predictability announced our shareholder return policy linked to CET1 ratio. Shareholder return policy linked to CET1 ratio is designed to return more to the shareholders, the…

Thank you very much for the presentation. We will now proceed to the Q&A session. [Operator Instructions]. We will take the first question from NH Securities. Jun-Sup Jung, you're on the line.

I am Jung Jun-Sup from NH Securities. Congratulations on your performance and the unexpectedly high shareholder return that you had announced. I have two questions. The first question is regarding Q1. Well, I did not expect this, and we are seeing KRW300 billion of share buyback and the annual dividend has increased by KRW100 billion, so it seems that in the first half, the shareholder return amount is quite sizable and higher than expected. And if this actually continues then in the second half, I think that this will probably be lower. So is there going to be a change in your policy? Or in the second half, if the market situation deteriorates, are you going to have preemptively shareholder return like you had in the first half or first quarter? And my second question is about the impairment dividends because we have seen some of your competitors saying that they would also engage in this. And I think that there is capital surplus in the reserve. So regarding this, can you tell us about what your position is? Thank you very much.

Thank you very much for your question. We'll soon answer your question.

Thank you very much. I am Sang-Rok Na, the CFO, and regarding the principle of our value program, it has still remained the same. It hasn't changed. And the excess capital that actually goes over our target capital ratio, well, that will be used, and we will keep to the principle. And regarding our second half shareholder return policies, we will be quite flexible looking at what happens in the market. And regarding this year, regarding 2024 performance and our shareholder return plans going forward, I think we mentioned in the second half, we will be quite flexible with our shareholder returns. So please understand it's a continuation and taking into consideration many different factors, and there are some uncertainties in the market. But in order to have stability in the market, and to show you that our strong will still exist for shareholder return, we wanted to show you this. And in the second half the amount of shareholder returns that were planned will preemptively were implemented in this quarter. I hope that you can take it with that understanding. And regarding the amount in the second half, I don't think you need to think that it will go down. But in the Q2 capital ratio, the growth trend will be a little bit sluggish, but it will still grow. And regarding the decision for share buyback and for RWA robust growth, taking all of that into consideration, we also expect a slight increase. However, regarding the robust growth of RWA for the amount of shareholder returns, it will have a positive impact because our value program has RWA and the excess capital ratio that actually is used in the formula. So we believe that it will not be a problem going forward. Also, regarding the -- we need to take out the shareholder return amount, but the Q1 CET1 ratio, well, taking into consideration that ratio, we believe that it will still maintain this level going forward. And regarding the impairment dividends, well, we do understand about the intention, and we are looking into the possibility, but we haven't come up with any detailed policies yet, but we will keep an eye on the trend and the market response and make decisions later on. Thank you for your question.

Thank you for your answer.

We will receive the next question, Park Hye-jin from Daishin Securities.

Good afternoon. Thank you very much for allow me to ask my question. So I have a question about the securities business recently, so there was a new regulation announced by the regulatory body regarding securities business. IMA new regulations has been issued. So KB is involved in this. If new subscribers are coming in, then competition will intensify. RWA control is important. But from the point of view of the growth, securities capital is slightly below KRW7 trillion. So increasing capital -- entering into the IMA sector, what is your view about the possible entry into this segment? Next is credit loss. So SME delinquency rate is going up very sharply. You talked about the target CCR with mid-40 bps CCR as the target. Is that taking into account the increase in the delinquency rate of the SME sector as well?

So we will soon answer one by one to each of your questions. Thank you.

Yunsun, CFO from Securities. So let me take the first question. So recently, IMA related to the entry into this business, many companies are thinking about this possibility in the case of KB Securities. As of yet, IMA entry into this business, we're not really thinking about that possibility. We're still watching the trends and then make the decision. And with regards to the issuance of commercial paper, there are a number of companies who have been issuing commercial papers and maintaining a stable margin and maintaining competitiveness. This is an issue that has become a challenge for many securities companies. But in the case of KB Securities, based on our competitiveness in the IB sector, we have high-quality investment products. We will identify these high-quality investment products that will continue to be the focus, and we will continue to secure appropriate margins. We do have that competitiveness to achieve that, and thank you.

You asked about the CCR. As you are well aware, the economic slowdown continues and the self-employed and there are borrowers with poor quality in terms of repaying their debt. And so we do have a significant number of delinquencies. And in the first quarter, a special factor was that for the construction companies, there are increasing borrowers who are asking for court receivership. And also conservative provisioning policies has been undertaken by the financial companies. So in the first quarter, credit cost provisioning compared to our business plan and compared to the previous quarter, yes, it has grown significantly over that. So we are starting from a high basis point. And in consideration of this, our company, we have focused on asset quality recovery, and we will focus upmost in reducing the NPL ratio. And in terms of the asset inflow for about two to three years ago, we have been very careful in dealing with the new companies and also -- we are also rebalancing potential non-NPLs, and we have introduced a warning system. And also for the borrowers in the card sector, we are actually placing very strict limits on the borrowing. And also the delinquencies, we are actually flexibly reorganizing our organization so that we are focusing on recovery of the short-term delinquencies. And when there is NPLs that arise, we will pursue a very fast recovery as well as write-off policies. And so up until the first half of this year, asset quality decline trend, we do believe this trend will continue in the first half. But going forward, if you look at the macroeconomic situation, we have supplemented budget and we have the new administration coming in. So we have these positive developments that we can consider. And unless there are other surprising events breaking out, these kind of -- the target of the annual provisioning, we do believe it will be at a manageable level similar to previous years.

Thank you very much for your answer.

We are waiting for a question to come in, and we will wait for the next question to come in. We will take the next question from SK Securities, Seol Yong-Jin, you are on the line.

Can you hear me?

I think we are having some technical difficulties. So maybe we can take the next question from Hanwha Investment Securities, Do-Ha Kim, you are on the line ma'am.

Thank you very much for the opportunity. I have two questions. You mentioned in your explanation regarding the margin about the low-cost deposits that are going -- coming in that was -- that added to your margin defense. And in Q2 or in the second half, do you think this defense will be continued? Second question is regarding RWA defense and CET1 improvement that was quite positive. And I think that led to active shareholder return. However, because we do have a lot of uncertainties, I know that there is some concern about corporate loans. So regarding the level of corporate loans, regarding your expected CET1 ratio, do you think that it can deteriorate because of these corporate loans that are under concern? If you have any strategies, we would appreciate it because it could appease our uncertainties and anxieties. Thank you very much.

We'll soon answer your question, please hold.

I am Jong-Min Lee, the CFO of the Bank. Regarding the NIM, the N-I-M, 1.76%, a 4 bp increase was for this quarter. And as you just mentioned, with the interest rate decline, there was asset repricing and the loan profitability went down. But with the core deposit increase and the repricing, we were able to have these funding costs that was actually rationalized. And going forward, we believe that the loan-to-deposit business growth rate will be curbed. So the NIM growth rate will be a little bit diminished. But regarding the asset growth speed and more transactions and more of our corporate customers, we believe our core deposits will grow. And taking all of this into consideration, we believe that we will be able to limit the decline of the NIM. Also related to the growth of RWA in Q1, for asset growth, we had about 1% growth. And for household loans, the regulations are still ongoing. And for the real estate transactions, we are seeing some downturn and the growth is curbed. How -- and for corporate loans, recently, we are seeing some concerns about economic downturn. So it is true that corporate growth is diminished because concerns about growth. However, we have as our goal, about 6% growth, and we will work toward that goal going forward. And regarding the current growth level, we believe that regarding the request from the government, even if we take that into consideration, it will be maintained within our planned range. Thank you.

I am the CFO of the Group. And regarding the CET1 ratio deterioration concerns that you voiced, well, I want to appease your concerns. You can be rest assured because RWA Q1 growth is 0.7%, and we are going to manage it within 4.5% for the year. And in Q2, we have a plan to manage it between 1% to 2.5%. And regarding corporate loan support for high-quality companies, of course, we are going to have selective support. And regarding the government policies and our own policies, we're not just going to blindly supply credit, but we are going to have also consulting in addition to providing credit to worthy borrowers, and we are going to work toward having, I think, like the goal, which is the -- a soft landing. So we are going to work so that our capital ratio is not deteriorating. Thank you.

Receive the next question, Jung Jun-Sup from NH Securities.

So thank you very much for taking my question. So I have just one more question. So recently, Homeplus related, so I think some of that has been reflected in your provisioning, but there might be contingent liabilities that, that may be possibly reflected. Do you have any expected provisioning that will rise from Homeplus and not only Homeplus, commercial real estate or in any other sectors going forward, do you expect any NPLs coming out from any other sectors? If you have, please, can you share them with us?

So we'll prepare the answer to your question. So please hold for few seconds.

Let me take your question. So in the case of Homeplus, in relation to that, in the first quarter, with regard to that exposure, we have satisfied the necessary provisions. And indirect exposure related through some of the funds, the investments that have been made into the funds those are indirect exposure, and we are reviewing that as well. And aside from that, real estate or overseas real estate already in the first quarter, as has been the practice in the past, we have very conservatively set aside provisions. In the case of the real estate properties, this year, there are some that are maturing. For those additionally, it actually becomes difficult or if payback becomes difficult to prepare for those situations, we are taking a conservative approach to this.

It seems that there are no questions in the queue. We will wait a little bit more. And if there are no other additional questions, we will be receiving questions that our shareholders sent to us through diverse SNS channels. However, before we take those questions, we will wait for questions coming in, in real time. It seems that there are no questions yet now. So maybe we can take the questions from the shareholders. So I think there are three main questions. And first, due to the next administration's policy changes, can there be changes to KB's value of plans? Second is about whether the annual cash dividend amount can be increased? Third is, 2025 share buyback and cancellation amount and timing? The CFO will answer these questions.

Well, regarding the first question, the conclusion is that regarding the value of program, it will continue as planned without any stoppages. And the political circle and the financial authorities all have the common understanding that the Korean stock market needs to be boosted to eliminate the Korean discount. So we believe that there will be different policies to this end. And the relevant programs will continue without suspension. That is our conviction. Regarding the cash dividend total amount increase that we may have for this year. Well, as was mentioned, we had KRW100 billion of increase compared to our plan. And when we compare ourselves to others, I think we have seen some comments that it was lower than others. So regarding the dividend payout ratio and others, we decided to have additional KRW100 billion of additional dividends. With regards to the third question about the 2025 share buyback and we talked about already the KRW300 billion approved additionally today. And because of the uncertainties, both at home and abroad, there are market volatility. And to respond to the volatility preemptively, we have implemented the shareholder return policy. And in the second half, those capital exceeding the 13.5% CET1 ratio, the excess capital will be used as funds for shareholder returns. That is all.

Thank you very much. We will conclude today's business results presentation. Thank you very much.