Greetings. I am Peter Kwon, Head of the KBFG IR division. We will now begin the 2025 first half 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; and other executives from the group. First, our Group CFO will cover 2025 first half major performance highlights. After that, we will have a Q&A session. Like in the previous quarter, please note that after our real-time Q&A session, we have set aside additional time for management team to answer questions that were previously submitted by our shareholders. I will now invite our group CFO to walk us through the first half business results of 2025.

Good afternoon. I am Sang-Rok Na, CFO of KB Financial Group. Thank you all for joining the first half 2025 earnings release presentation. Today, I will walk through key results of the first half and update you on the shareholder value and return, then move on to the details of our earnings. First, Page 1. Q2 net profit reported KRW 1,738.4 billion with first half cumulative profit reporting KRW 3,435.7 billion and ROE of 13.03%. Increase in RWA for the first half on a cumulative basis was managed at around 2.4%, whilst CET1 ratio as of June end came in at 13.74%. All in all, we maintained the balance between resilient earnings power and stable capital management. And under KB's shareholders' return framework, we will be using what is above CET1 ratio of 13.5%, which is KRW 850 billion in total as funds for shareholder return in the second half. When accounting for KRW 300 billion of proactive buyback done in the second quarter, second round of shareholder return upcoming in the second half will amount to around KRW 1.150 trillion. Out of the total annual cash dividend of KRW 1.34 trillion for 2025, today's BOD resolution decided on KRW 335 billion of equally portioned dividend for second quarter and DPS of KRW 920. Also, we decided to first buy back and cancel KRW 660 billion of treasury shares within the scope of distributable profit. Out of KRW 850 billion, the KRW 190 billion, which is excess capital would be used as fund for shareholder return at book closing of 2025 accounts following the BOD resolution. And this amount will be classified and attributed to shareholder return for 2025. It's inevitable that portions of the second round of shareholder return for 2025 will be first paid in Q2, while the…

We will now begin the Q&A. [Operator Instructions] We will take the first question, Kim Jaewoo from Samsung Securities.

I would like to ask 2 questions. Even with the earnings presentation, I still have a question as to the size of your second half shareholder return. In terms of the timing of the share buyback, you will be doing that in the early next year. So for the second half, is it correct for us to say that the size of the shareholder return for the second half is KRW 850 billion. So also for next year, what are your plans to make sure that you have ample amount of distributable profit for dividend? And second is a question related to your provisioning. I was expecting a lower figure in terms of the provision. So I'm a little bit confused. As you've mentioned, all the asset quality-related metrics have improved, but still, we've seen certain increases in the provisioning levels. So I would like to understand as to why that is. I understand the credit cost guidance is 45 basis points for the year. So in the first half, we are announcing CCR at 55 basis points. So that means that in the second half of the year, what would you guide us? Because you usually provision more in the end of the year, even if we consider that on an annual basis, I would like to understand as to the annual guidance. Is it staying the same as per your previous communication?

So just give us one moment as we prepare to answer your questions.

Thank you, Mr. Jaewoo Kim, for your question. Regarding the question on the size of the shareholder return, as mentioned during the presentation in the second half of the year, KRW 850 billion, that is the size. However, the excess capital above the distributable profit, KRW 660 billion, therefore, is decided to be paid to be enforced. With the BOD resolution, the remaining, which is KRW 190 billion will be used as funds for shareholder return. So as mentioned during the presentation, so including the KRW 190 billion, 2025 -- KRW 190 billion will be attributed to 2025 shareholder return, which is in excess of the distributable profit. In the second half, for us to ensure we have ample amount of distributable profit, we are open to many different options. First being receiving the interim dividend payout from our subsidiaries. We think that, that is a way for us to ensure that we have these resources. And also, there is also impaired dividend payout as well. So we are open to various different options, so you do not need to be concerned. So KRW 850 billion as per our presentation, that is the size of the second half shareholder return. With the CCR for the second half of the year, as you have mentioned, the second quarter CCR basically reported a similar level as we've seen in the Q1. So basically, in line with the natural increase in the provision and also to counter decline in the property. What we did was we had a preemptive provisioning of around KRW 100 billion. Out of certain -- potentially, certain loans and exposures, what we did was in terms of the overlay approach, we made certain additional provisioning so that we could ensure a certain level of loss absorption capability in light…

We will take the next question from NH Securities, we have Jung Jun-Sup on the line.

I am from NH Securities, Jung Jun-Sup. I have 2 questions. First question is regarding your great performance and 0.8 PBR, I think you have achieved nearly that number. And although it may not be imminent for the contribution of dividends and share buyback, I think you can consider that. And if you can have some changes in your policy, can you tell us about the timing and what will change going forward? If you can share with us anything at this juncture? My second question is about your loan growth. In last month, the government came up with measures to control household loans. And in the second half, it seems that the speed of household loan growth will be decelerated compared to the first half. And regarding the loan growth guidance that you have presented in the early part of the year, will this change? And if household loans suffer, are you going to come up with any countermeasures?

Thank you very much for the insightful questions. Regarding our shareholder return policy, regarding PBR enhancement and the mix change that may happen, according to our framework, I have been emphasizing that with lower PBR, share buyback and cancellation amount will be increased. And when PBR goes up, share buyback and cancellation contribution will go down and cash dividends will go up. I think we have mentioned this in our corporate value enhancement plan. And regarding your question, as you have just asked, well, our PBR is improving faster than we had expected and a lot of the discount factors have been resolved, and it seems that if we can reach the consensus, then regarding the cash dividend payout ratio, it can go up, and it is being improved very quickly. And we are seriously considering a change in this mix at this juncture. And regarding our loan asset growth, our bank CFO will take that question.

Thank you for the question. And I will answer that question regarding loan growth for 2025, for profitability and asset quality, focusing on those 2, we considered high-quality asset growth and having a very efficient capital usage and the bank's loan growth, we believe that it will be 4% to 5% within our business plan. And as you have mentioned, the financial authorities have a financial plan for controlling household loans. And we are going to have different loans that are profitable and other mortgage loans that will be a focus. And for the collective loans, I think we will be more considerate, and we are going to have optimization of our household loan portfolio. Looking at the economic growth pace and considering the reinforcement of the government's policies, we believe that the household loans will grow at about 3%. And for corporate loans, we are going to focus and prioritize highly -- high-quality loans, and we're going to have 6% to 7% annual growth. And for large corps, according to the business environment changes, we're going to do our best to secure high-quality corporate loans going forward. And for SME loans, we're going to strengthen the customer base, and we're going to have more accelerate transactions. And for SOHOs, we are going to have growth through portfolio diversification in different areas.

We will take next question from Hanwha Investment Securities, Kim Do Ha.

You've mentioned distributable profit. And so I was able to look at the disclosed information from the subsidiaries receiving the dividend within -- before the end of the year. Is that possible? And under the assumption that there is no change in the rules, would the dividend payout from the subsidiaries be possible from February? Because out of your total capital, you would have to deduct certain things and the reserve, if you look at the P&C insurance, it seems like there is no ample room there. So that's why I'm asking this question. And my second question is on PBR. If PBR is improving, you've talked about increasing the amount of cash dividend payout. So at that point in time, do you have a certain valuation level that you're considering as a baseline? I ask this question because other banking holding companies if you look at their value of disclosures, they say PBR 0.8 to 1x the range that they would be willing to adjust the ratio. So could you also share with us a certain band in terms of the PBR multiple?

So just give us one moment before we answer that question.

Yes, thank you very much for that good question. So I talked about the potential interim dividend payout from the subsidiaries and using that as funds for profit for dividend. If you look at our life insurance and P&C, the interim dividend that we get paid from that, that is not something that we are considering because there is a capital discipline and capital ratio-related regulation that's changing in the insurance industry. So we are thinking more of that impact coming from next year, not necessarily this year. So setting the insurance aside, we also have securities and brokerage subsidiaries. So we're thinking of getting that interim dividend around these types of subsidiaries. Now for the PBR range and the band, not other holding companies, but us as well, 0.8x to 1x the multiple within that range, we are open to potentially adjusting the mix between the two. This range itself is quite broad. But what's important is 0.9, 0.8, it's not the number itself that's important. It's about actually relieving all the discount factor and the start of the rerating cycle. If we think in our view that, that timing has come, we will be able to come back to you and give you a more concrete answer. The band that other holding companies are talking about, I can also tell you that, yes, we are also moving within that range of PBR.

From HSBC, Jaewoong Won.

Congratulations on your great performance and thank you very much for shareholder return. I have 2 questions. The first question is about overseas business. Bukopin Indonesia, Well, I know that you have -- you're turning into a profit, and I think you're seeing stabilization. And regarding Q2 performance, I would like to know more for Bukopin. And in the second half of the year, can you tell us about how you think the earnings will play out? And I know to JB Holdings, you have sold capital. And regarding those profits, how -- when will it be attributable to your P&L? And I know that you have the excess of the distributable profit that makes you need to defer it to the next year. And I think some decisions are made at GSM. So regarding the KRW 190 billion of additional share buyback and cancellation, will it be after March because I'm not very knowledgeable about this. So can you tell us about the timing, if that will be when or not?

Thank you very much for your questions, and we will soon answer your question.

Thank you very much for your great questions. And for the reduced dividends, well, it needs the resolution from the GSM. And regarding interim dividends, this can be done before that. However, with the interim dividends and after that we close 2025, the books, then there will be the distributable profits that are calculated that can be done for the next year, fiscal year. So at that time, we can tell you that we can have additional shareholder return.

Thank you very much for your question. I am Kang Nam Che, in charge of global business at KB Kookmin Bank. And I have a question about KBI or Bukopin. And in Q2, we turned up profit. And in the first half, we expect about KRW 20 billion of profit. And in the second half, we believe that this trend will continue. However, for G&A in the second half, we will have a bit more. So it might be a little bit lower than the first half, but we believe a KRW 20 billion level of net income or profit will continue. And regarding KBI subsidiary, JB Capital acquired capital, in the case of Indonesia, for the buyer, well, there is fit and proper test that needs to be passed by the authorities, and it will take about 1 year for this test to be completed. Accordingly, regarding the proceeds of the sale, we believe that it will be booked probably in the first half of next year. Thank you.

Thank you. We do not have any additional questions that's in the queue, but we will wait 1 more minute. If there are no additional questions, let me now respond to some of the questions that were submitted by our shareholders. But before we go into that, let us just wait one moment. Yes, from Korea Investment Securities, Baek Doosan, please go ahead.

I am Baek Doosan from KIS. I know you've talked about this, but I just have one more follow-up question on shareholder return because KRW 190 billion, you will be buying back and canceling next year. And I think this is about 5 basis points in terms of capital. So next year, basically, you will use the sources that's above 13.5% in excess of that. But for next year, it's going to be 13.05% or 13.06%. So would that be the fund for distribution? Or is it still going to be 13.00%? So I just would like to get some color with regards to the excess capital and the CET1 ratio.

Yes. I think your question actually has the answer in it because it actually is the same thing. Basically, capital that's in excess of 13% of CET1 will be fully returned back to the shareholders. But the 5 basis points because we did not pay that out yet. So based upon the CET1 ratio of the year-end, it will still be reflected in the CET1 ratio as of the end of the year. So for that amount, that is going to be attributed to 2025 shareholder return amount, as I've mentioned during my opening presentation.

Thank you for your questions. I don't think we have additional queues yet. So we will hold and wait for questions. I don't think that we have additional question. And I think that we can cover some questions that were asked by our shareholders. I think we can share the screen. And regarding the separation of taxation of dividend income, if this takes place, do we have any plans to increase our cash dividends? And second question, according to the level of PBR, do we -- can we -- or are we going to adjust our dividend shareholder buyback and cancellation ratio? The CFO will answer the questions.

I think I've already answered the second question. And regarding if the separate taxation of dividend income takes place, of course, we need to actively consider whether we're going to expand our cash dividends. And we do not have concrete calculation basis for dividend payout ratio or detailed provisions of the enforcement decree. So we cannot really set forth clear standards. However, I have mentioned that based on PBR, cash and share buyback and cancellation, we are going to do our best to have efficient mix. So regarding the size of our profits, our cash dividend payout ratio and dividend yield, we're going to consider all of this. And regarding the separation of taxation of dividend income, we believe that it will be a great opportunity to expand our shareholder return. And because we are representative stock for the dividend payout, I think if we have the implementation of separate taxation of dividend income, we're going to do our best to have this work in favor of our shareholders.

I think that now we can conclude today's earnings release. Thank you very much for your attention.