KB Financial : 2021 First Half Earnings Release

1H21 Business Results

July, 2021

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Major non-recurringitems 2)

I. 1H21 Financial Highlights _ Overview

			Group Profitability Overview												Group Net Profit Analysis (bn won)
bn won, %		1H21	1H20	YoY		2Q21	1Q21		QoQ																			143
																			67		Provision		347
																											44			155			Non-
Net Interest Income	5,401.1	4,683.2		15.3	2,758.8	2,642.3	4.4
															for credit		G&A
																										Profit from	Profit from	operating		losses		468
Net Fee & Commission Income	1,832.6	1,381.3		32.7	865.4	967.2	-10.5									451		profit				expenses		2,474
		financial	insurance
Other Operating Profit	-23.4		-49.6		N.A.	-57.2	33.8		N.A.										investments	business										Tax
											Fee &
																																							expenses
																								commission
Gross Operating Income		7,210.3	6,014.9		19.9	3,567.0	3,643.3	-2.1							718												and others
							income
G&A Expenses		3,392.6	3,045.6		11.4	1,669.5	1,723.1	-3.1	1,711
Provision for Credit Losses	397.1		539.7		-26.4	223.7	173.4	29.0						Interest
																						income
Net Operating Profit	3,420.6	2,429.6		40.8	1,673.8	1,746.8	-4.2
Net Non-Operating Profit	32.8		-34.0		N.A.	-6.8	39.6		N.A.
Profit for the Period	2,492.6	1,731.4		44.0	1,207.4	1,285.2	-6.1
				1H20																		1H21
			Profit attributable to	2,474.3	1,711.3		44.6	1,204.3	1,270.0	-5.2		Note) Each earnings component is stated as in 'before tax' amount
			controlling interests
			Group Net Profit Trend1) (bn won)											Net Profit by Subsidiaries1) & Non-Bank Contribution2) (bn won)

							2,474
	Over 3tn for 4 consecutive years				89
				192
3,311		3,312	3,455		2,505	1,711	253	Non-Bank	45.2%
			143
3,061		1,880
				27
						374
						164
						144
						129
				1,711	2,474		1,423
					1,247	Bank	54.8%
2017	2018	2019	2020	1H20	1H21	1H20	1H21		1H21

Note 1) Based on profit attributable to controlling interests

1. Major non-recurring items (after tax)
   1H20: Preemptive provisioning based on FLC (W149bn), Large-scale reversals of provisioning (W55bn), PEF related losses including TRS valuation losses (W29bn)
   1H21: KB Insurance ERP costs(W21bn), Insurance loss from large-scale fires(W10bn)

Bank		Securities		Insurance		Card		Prudential Life		Others(incl. adjustment for consolidation)

Note 1) Based on each subsidiary's profit attributable to controlling interests

1. Based on simple arithmetic sum of each subsidiary's net profit on the financial statements for group reporting

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I. 1H21 Financial Highlights _ Key Financial Indicators (1)

Group ROA∙ROE (%)				Loans in Won Growth (tn won, %)

NIM (%)

11.73		12.50	12.07		12.38
			11.48	8.97	11.95
	5.61
		0.85
0.81			0.77		0.81
			0.64
	0.38
3Q20	4Q20	1Q21	2Q21	1H20	1H21

295 302

2020 2021.6

1.7	1.2		1.7
	0.4
292	295	297	302
		138
134
133	134	2.7

0.8	-0.5	0.1
		164
158	162	163
2.4	2.6
		0.6	0.9
'20.9	'20.12	'21.3	'21.6

1.82	1.82	1.82
1.75
1.73		1.78

	1.56	1.56	1.56
1.49	1.51		1.53

3Q20

4Q20

1Q21

2Q21

1H20

1H21

ROA

ROE

ROE(on recurring basis)

					Household		Corporate			Total Growth(QoQ)
					Household Growth(QoQ)			Corporate Growth(QoQ)

GroupBank

Enhanced profitability driven by core earnings and diversification

·1H21 Group ROA and ROE recorded 0.81%, 11.95% respectively

·Improved earnings capacity on the back of stable growth in core income as well as diversified business portfolio

·1H21 ROE on a recurring basis recorded 12.38%, demonstrating solid earnings fundamental and profitability

*ROE: Based on ROCE(Return on Common Equity), which represents profitability of common equity

Secured stable interest income stream led by solid loan growth

·Loan in Won of the bank increased 2.0% YTD and 1.7% QoQ, amounting to W302tn as of the end of 2Q21

·Household loans increased 1.5% YTD to W164tn, driven by Jeonse and prime unsecured loans

·Corporate loans continued stable growth by 2.8% YTD, driven mostly by growth in SOHO and prime SMEs

Focus on margin management and diversify interest income sources

·1H21 Group NIM and Bank NIM marked 1.82% and 1.56%, up 4bp and 3bp YoY respectively

·1H21 Group NIM and Bank NIM improved YoY driven by efforts to increase margin by securing low-cost funding and pursuing loan strategy based on profitability. 2Q21 NIM however recorded last quarter's level due in part to repricing in the loan portfolio

·Focus on NIM management by expanding low- cost deposits and implementing proper loan pricing, as well as diversifying income sources

03

I. 1H21 Financial Highlights _ Key Financial Indicators (2)

Group Cost-Income Ratio(CIR) (%)

Credit Cost Ratio(CCR) (%)

Group BIS Ratio (Basel III, %)

55.2	54.5	54.9	54.7
51.8	50.5	50.9	47.1
			49.4
			45.3

0.20	0.21	0.20

0.05 0.04 0.04

0.260.25

	0.22
0.20	0.20
0.13	0.11
	0.10
0.09	0.08

			16.04	16.03
15.23			15.28
	14.60	14.48	14.78
		14.76
14.60

13.97	14.06
13.86
14.60

13.97	13.58	13.79	13.70
	13.30

2017 2018 2019 2020 1H21

CIR	CIR(excl. non-recurring items)

2017	2018	2019	2020	1Q21	2Q21
		Group		Bank		Cumulative
		excl. COVID19-related additional provision

2017

2018

2019

2020

'21.3

'21.6(e)

BIS Tier1 CET1

Improved cost efficiency led by enhanced		Sustained preemptive and	Industry-highest capital buffer
profitability and cost management		conservative asset quality management

·1H21 Group CIR recorded 47.1%, demonstrating significant improvement in cost efficiency led by growth in core earnings and group wide cost control efforts

·1H21 Group CIR on a recurring basis recorded 45.3%, maintaining its stable downward trend. Improvement in cost-efficiency becomes much more visible when additionally taking into account accrual of bonus expenses

·Continue to improve cost-efficiency through earnings expansion and cost control efforts

·1H21 and 2Q21 Group CCR was maintained at stable levels, recording 0.22%, 0.25% respectively

·Proved KB's high competency in risk management by pursuing loan growth centered on high-quality assets and preemptive credit quality management, despite growing concerns over asset quality in result of prolonged COVID-19

·Continue preemptive and conservative asset quality management in consideration of loan forbearance related to COVID-19 and concerns over economic uncertainties

·Group BIS and CET1 ratios are expected to mark 16.03% and 13.70% as of the end of June 2021

·Despite payout of dividend and increased RWA due to loan growth, Group secured the industry highest capital adequacy on the back of solid increase in net profit and strategic management of capital including issuance of hybrid bonds

·Bank BIS and CET1 ratios are expected to mark 18.92% and 15.88%, respectively

04