KB Financial Group Inc. on Thursday reported a 61% jump in first-quarter profit, led by a nearly threefold rise in earnings at its flagship unit Kookmin Bank, which shook off the fallout from heavy losses on equity-linked securities (ELS).
Net profit at the largest banking group in South Korea soared to 1.70 trillion won ($1.2 billion) in the quarter ended in March.
That compares with a net profit of 1.06 trillion won in the same period of last year and is estimated to be the highest on-year profit growth among the country’s top four financial services groups.
The 170% on-year increase was largely driven by a low base effect after Kookmin Bank put aside substantial reserves in the same period of last year to compensate investors in ELS tied to Hang Seng China Enterprises Index (HSCEI).
These derivative instruments, sold to individual investors, triggered heavy losses following a plunge in the benchmark index.
Kookmin Bank accounted for 60% of the group’s earnings with a net profit of 1.02 trillion won.
In a regulatory filing, KB Financial said it will spend 300 billion won ($210 million) to buy back shares between April 25 and July 24 for retirement.
By Yeonhee Kim
yhkim@hankyung.com
Jennifer Nicholson-Breen edited this article.
