KB Financial : Annual Report

Annual Report 2023

ANSWERS for the future

KB Financial Group Annual Report 2023

Contents

For Society

INTRODUCTION	GROUP REVIEW	SPECIAL REPORT	MD&A	OPERATION REVIEW	APPENDIX	FINANCIAL SECTION

Introduction	Special Report	Appendix
03	CEO Message	26	ESG Leadership	74	Company Directory
06	Answers for the future	35	Digital Transformation	74	Global Network
12	Vision & Strategy	40	Global Business	77	Disclaimer
		43	Risk Management

06p

For Customers

08p

Group Review	MD&A
15	Company Profile	50	Management's Discussion
16	Year in Review		& Analysis
18	Financial Highlights
20	Shareholder Information	Operation Review
		58	Bank
		63	Financial Investments
		68	Insurance
		71	Credit Finance

Financial Section

1. Consolidated Financial Statements

1. Separate Financial Statements

To Shareholders

10p

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KB Financial Group Annual Report 2023

2

INTRODUCTION		GROUP REVIEW	SPECIAL REPORT	MD&A	OPERATION REVIEW	APPENDIX	FINANCIAL SECTION
CEO Message
Answers for the future Vision & Strategy

CEO Message

Dear shareholders and esteemed members of KB Financial Group's stakeholder community, let me begin by thanking all of you for your unwavering interest in and support of KB Financial Group.

In 2023, global markets were engulfed by uncertainties arising from an economic slowdown and geopolitical risks. The domestic market also had to deal with concerns over real estate risks spilling over into a financial crisis and swelling household debt amidst a high interest rate and high inflation environment.

Despite these domestic and international difficulties, KB Financial Group continued to ensure internal stability while sustaining our position as the leading financial group most trusted by customers. In particular, our balanced business portfolio across the banking and non-banking sectors underpinned our stable growth amidst uncertain business environments. In fact,

our eleven subsidiaries generated significant achievements in their respective sectors, thus contributing to our goal of becoming the No.1 financial platform company in Korea.

At the same time, our relentless endeavors toward a better customer experience paid off, as KB Star Banking saw its monthly active users (MAUs) surpass 12 million. This milestone, unprecedented by any Korean legacy bank, was achieved by our super app, which functions as a financial hub that integrates the primary financial functions of both banks and non-bank subsidiaries, as well as life-embedded services such as KB Wallet, thereby enhancing customer convenience and accessibility.

KB Financial Group Annual Report 2023 03

INTRODUCTION		GROUP REVIEW	SPECIAL REPORT	MD&A	OPERATION REVIEW	APPENDIX	FINANCIAL SECTION
CEO Message
Answers for the future Vision & Strategy

Additionally, we revamped our group membership program, KB Star Club, to enhance customer benefits, aligning with our business philosophy that prioritizes customer value. At the same time, KB Pay-ourone-stop digital payment platform-expanded its services to include commerce and travel options.

Most importantly, I am pleased to report that our steadfast dedication to ESG leadership was recognized globally when we became the first Korean financial institution to achieve the highest rating (AAA) in the MSCI (Morgan Stanley Capital International) ESG evaluation. This recognition underscores our ongoing expansion of ESG financial product offerings, our efforts to reduce greenhouse gas emissions and energy use, and our commitment to inclusive finance for diverse demographics.

Furthermore, in the CIB sector, we led the domestic market in syndicated loans, debt capital markets (DCM), and mergers and acquisitions (M&A). In the WM/pension sector, we solidified our leading position in the retirement pension market when we became the first Korean retirement pension manager whose AUM size surpassed the KRW 40 trillion milestone.

Now, let me briefly discuss our business performance over the past year. In 2023, KB Financial Group recorded a net profit of KRW 4.63 trillion, marking an increase of KRW 478.9 billion from the previous year. This growth can be attributed to increased interest income driven by asset growth and a rising net interest margin (NIM), along with operating profit growth from improved gains on securities and derivatives, despite higher proactive provisioning for credit costs amid prolonged high interest rates and economic slowdowns both domestically and internationally.

In terms of asset size, KB Financial Group's total assets as of the end of 2023 amounted to KRW 715.74 trillion, an increase of KRW 27.07 trillion from a year ago. This can be attributed to the continued growth in corporate loans that focused on premium clients and the pursuit of profitability-driven securities growth.

I believe that this robust performance in both net profit and asset size amidst difficult business environments was made possible because of the unshakable support of our customers and shareholders, as well as the relentless efforts of all KB Financial Group employees.

As we move forward, everyone at KB Financial Group will continue to embrace change and innovation, aiming to enhance our prosperity as a leading financial group.

Respected shareholders,

Today, societal and customer expectations for financial companies are becoming increasingly diverse and complex. Moreover, technological advancements are driving structural changes within the financial industry, presenting market players with unprecedented risks.

Determined to evolve as an unswerving leader in the face of these formidable challenges, KB Financial Group has firmly set a long-term vision to become the "No.1 digital financial group that grows alongside customers as a lifetime financial partner." To achieve this vision, we have formulated strategic initiatives aimed at ensuring our continued growth and resilience.

First, we aim to secure a sustainable growth and revenue base by enhancing the competitiveness of our Super Core business areas to capture new opportunities and pursue further investments.

Second, we will strive to elevate customer trust and enhance our competitiveness in key growth engines, including investment management, wealth management, insurance, and global operations, to bolster our Core Business domains.

Third, in the realms of non-financial businesses and ESG-our Next Core areas for future leadership-we are committed to solidifying the Group's position and refining our global business models.

Fourth, we strive to differentiate our customer channels by providing convenient services through our digital platforms that match in-person interactions, while also enhancing our embedded finance offerings.

Fifth, we will leverage comprehensive technology and AI (Tech·AI) to further enhance our operational efficiency and create new value, thereby achieving our transition into a tech-driven financial company.

Finally, we are dedicated to fostering a culture where our employees-all dignified professionals- lead the way in embracing change, continuous learning, and developing proactive responses to new risks.

KB Financial Group Annual Report 2023 04

INTRODUCTION		GROUP REVIEW	SPECIAL REPORT	MD&A	OPERATION REVIEW	APPENDIX	FINANCIAL SECTION
CEO Message
Answers for the future Vision & Strategy

Dear shareholders,

KB Financial Group is committed to continuous innovation and growth, even within the most demanding environments, to meet and exceed our shareholders' expectations and deliver enhanced value.

Today, our efforts remain resolute in realizing the Group mission of "Financial services delivering change-happier life and better world" while we pursue more extensive ESG initiatives. Furthermore, we are dedicated to achieving mutual growth with society and our customers as we strive to be a financial group that coexists with all stakeholders.

In conclusion, I would like to extend my deepest gratitude to all our shareholders for your unceasing support of KB Financial Group. It is my sincere wish that the coming year brings you unparalleled success and continued good health.

Yang Jong-hee

Chairman & CEO I KB Financial Group Inc.

		THE HISTORY OF CEO
1987		Seoul National University (B.A of Korean History)
1997		SoGang University Business School (Graduate)
2008		General Manager, Seochoyeok Br. (KB Kookmin Bank)
2008	~ 2010	General Manager, Office of Board of Directors
		(KB Financial Group Inc.)
2011	~ 2013	General Manager, Strategic Planning
		(KB Financial Group Inc.)
2014		Managing Director, Strategic Planning
		(KB Financial Group Inc.)
2015		Deputy President, Financial Planning/HR/IR
		(KB Financial Group Inc.)
2016	~ 2020	CEO (KB Insurance Inc.)
2019	~ 2020	Head, Insurance Business Unit (KB Financial Group Inc.)
2021	~ 2023.11	Vice Chairman & COO (KB Financial Group Inc.)
2023.11 ~	Chairman & CEO (KB Financial Group Inc.)

KB Financial Group Annual Report 2023 05

INTRODUCTION	GROUP REVIEW	SPECIAL REPORT	MD&A	OPERATION REVIEW	APPENDIX	FINANCIAL SECTION
CEO Message Answers for the future	Vision & Strategy

What initiatives is KB undertaking to

ENHANCE SOCIAL VALUE?

Businesses can thrive sustainably when they balance their financial goals with customer and social value. Today, the financial industry is making a concerted effort to solve urgent environmental and social issues such as climate change and income disparity through trusted financial solutions, ensuring we all meet our social responsibility and drive enduring societal change.

KB Financial Group Annual Report 2023 06

INTRODUCTION	GROUP REVIEW	SPECIAL REPORT	MD&A	OPERATION REVIEW	APPENDIX	FINANCIAL SECTION
CEO Message Answers for the future	Vision & Strategy

		ESG Strategic Directions	8th	MSCI ESG Ratings for 2023
		First and only among domestic	DJSI World	AAA
		financial companies
KB Financial Group envisions	(grade)
a society that THRIVES TOGETHER	Index	The first domestic financial
WITH ITS PEOPLE.
	the highest AAA rating for
				company to receive
		Advancing climate	DJSI World Index for	two consecutive years
		an eighth straight year in 2023
		change response
		strategies

We are committed to fostering balanced and inclusive growth based on diversity. Our strategy emphasizes synergy and coexistence as we align the growth trajectories of KB with our customers and the broader community. Driven by a commitment to social responsibility, we remain focused on enhancing our societal roles through financial contributions.

	Internalizing
2023 KB	responsible
management for
	society
ESG	Spreading
Highlights
governance
	the culture of
	transparent

KB ESG Financing

36.5

(tn won, cumulative)

By the end of December 2023, KB Financial Group's

ESG products, investments, and loans reached

KRW 36.5 trillion. The scale of ESG financial products is

growing annually across environmental, social responsibility,

corporate governance, and integrated ESG sectors.

Renewable energy generation/ facilities (annual basis)

1,908(Mwh) / 37(sites)

KB Financial Group is fulfilling its social responsibilities and

roles as a leading ESG company by expanding the use of renewable energy

and contributing to the transition to a low-carbon economy

2023 ESG Financing	36.5
(tn won)
	32.2

22.9 25.2

2020	2021	2022	2023	07
			KB Financial Group Annual Report 2023

INTRODUCTION	GROUP REVIEW	SPECIAL REPORT	MD&A	OPERATION REVIEW	APPENDIX	FINANCIAL SECTION
CEO Message Answers for the future	Vision & Strategy

What powers

KB'S DISTINCTIVE

CUSTOMER EXPERIENCE?

The future of the financial industry is characterized by the rapid adoption of technologies like Generative AI, big data, cloud computing, and blockchain, as these tools facilitate personalized financial services and innovate business models. The future of finance hinges on the ability to deliver novel experiences in customer interactions.

KB Financial Group Annual Report 2023 08

INTRODUCTION	GROUP REVIEW	SPECIAL REPORT	MD&A	OPERATION REVIEW	APPENDIX	FINANCIAL SECTION
CEO Message Answers for the future	Vision & Strategy

KB offers customers the best experience by CREATING PRACTICAL

VALUE THROUGH NEW TECHNOLOGIES.

No.1 Digital	STT·TA
Speech to Text and Text Analysis
Finance Group	enabling precise communication
with customers

KB Financial Group is reinforcing its digital competitiveness as we continue to implement bold initiatives for future growth. Our AI Contact Center (AICC) exemplifies our digital innovation, offering seamless, integrated services across our subsidiaries based on a Group-wide infrastructure. By harnessing cloud technology, data analytics, and AI, we tailor our services to meet specific customer needs, transforming our contact center into a pivotal non-face-to-face channel that redefines traditional service values.

	One		One
	Platform		Brand
	One System		KB Link Service
	for universal Group-wide usage		facilitating seamless consultation
			transitions between subsidiaries

Customer engagement

Concierge

			AI Contact
Enhanced			Center
customer
engagement/
EBM	Conventional
Consultation and
response	Call Centers
			Technology
	Direct reponses	by	Automated
	consultation staff	consultation

AI chatbot and callbot services

24/365

AI services processing customer inquiries to appropriate subsidiaries for resolution

KB AI Contact Center Goals

Advancing the	Channels for	Internalizing	Operating
consultation	customer	specialized	system for
process	engagement	competencies	innovative
	and marketing		technologies
	activities

KB Financial Group Annual Report 2023 09

INTRODUCTION	GROUP REVIEW	SPECIAL REPORT	MD&A	OPERATION REVIEW	APPENDIX	FINANCIAL SECTION
CEO Message Answers for the future	Vision & Strategy

What are the UNIQUE

COMPETITIVE STRENGTHS OF KB FINANCIAL GROUP amid intensifying competition within the industry?

As of the end of 2023, the BIS capital ratio of Korean banks exceeded 15%, a very stable figure, while the common equity tier 1 (CET1) ratio, an indicator of a total loss absorption capacity (TLAC) in the event of economic shocks, has also improved. However, as a potential for increased volatility in the financial markets still lies in 2024, the top priority for financial groups is seen as expanding the revenue sources of the non-banking sectors and enhancing synergies between the Group's subsidiaries.

KB Financial Group Annual Report 2023 10