KB Financial Group, South Korea's largest financial holding company, earned 1.91 trillion won in the third quarter, 4.3% less than in the second quarter, as a slowdown in stock-trading fees took some of the shine off a record year. Profit attributable to shareholders for the first nine months rose 13.1% to 5.79 trillion won, the highest for that period in the group's history, according to its results presentation.

For investors in Asia, the numbers show how much Korean bank earnings now ride on the country's stock market. A strong Korean stock market sent brokerage and trust fees soaring, and those businesses carried KB through a quarter in which its main bank's lending margin narrowed. Korean financial groups have also become a favored way to play Seoul's push for higher shareholder returns, and KB's share count keeps shrinking.

Brokerage fees do the heavy lifting

Net fee and commission income for the nine months jumped 38.5% to 4.09 trillion won, the presentation showed. Trust fees almost doubled to 718.7 billion won. KB Securities earned 1.07 trillion won over the period, more than twice the 496.7 billion won it made a year earlier, and it was the group's second-biggest profit contributor after KB Kookmin Bank.

The third quarter was weaker. Fee income fell 29.7% from the second quarter to 1.13 trillion won, as KB pointed to lower equity trading volume on Korean exchanges. Other operating profit, which includes securities and derivatives gains, almost vanished, falling to 3 billion won from 376.4 billion won.

Interest income partly filled the gap. Group net interest income rose 11.6% from the previous quarter to 3.51 trillion won, and was up 2.9% at 9.99 trillion won for the nine months. KB Kookmin Bank's third-quarter profit rose 20.1% from the second quarter to 1.35 trillion won, taking its nine-month total to 3.58 trillion won, up 6.3%.

The bank's net interest margin slipped to 1.72% in the quarter from 1.74%. KB blamed higher funding costs as money moved around in volatile markets, and said loan repricing after rate increases in July and August should start to show from the fourth quarter.

A one-off helped the nine-month figure. KB booked a 231 billion won tax benefit after its bank and card units recognized deferred tax assets linked to share disposals, part of setting up an intermediate holding company in Indonesia.

Capital and payouts

Asset quality held up. The group's nonperforming loan ratio was 0.69% at the end of September, compared with 0.67% three months earlier, and nine-month credit provisions fell 5.9% to 1.58 trillion won. Third-quarter provisions rose 8.4% from the second quarter, however, to 563.3 billion won.

KB's common equity Tier 1 ratio rose to 13.80% from 13.75% at the end of June, despite asset growth and payouts. Common shares outstanding fell 3.8% over 12 months to about 348.3 million, reflecting buybacks and cancellations. The board declared a quarterly dividend of 1,167 won a share for the third quarter, 25.5% above the 930 won paid for the same quarter a year earlier, with a record date of Nov. 12.

Not every large holder has stayed. Capital Group cut its KB stake to 6.82% from 8.27%, The Korea Herald reported in September, while raising its holding in Shinhan above 5%.

Shinhan, Hana and Woori

The four biggest groups, KB, Shinhan, Hana and Woori, earned a combined 5.76 trillion won in the quarter, The Korea Times reported, with Woori the only one to post a year-on-year decline.

Shinhan Financial Group, which reported on Oct. 27, earned 1.58 trillion won in the quarter, down 12.9% from the second quarter, according to The Korea Herald. Its nine-month profit rose 12.7% to 5.03 trillion won, and its CET1 ratio was 13.62%. Chief Financial Officer Jang Jeong-hun said the group expects to hit its 10% return-on-equity target a year early, the Herald reported. Shinhan declared a 740 won quarterly dividend and a 450 billion won buyback, with about 3 trillion won in total shareholder returns planned for 2026.

Yonhap, in a report carried by The Korea Times, said Shinhan's quarterly profit rose 10.9% from a year earlier; the Times' own roundup put the increase at 11.3%. Shinhan Bank earned 1.2 trillion won in the quarter, Yonhap said.

Hana Financial Group earned 1.22 trillion won, its highest quarterly profit since Hana Bank merged with Korea Exchange Bank in 2015, according to The Korea Times. Woori Financial Group, which reported on Oct. 23, earned 1.05 trillion won, down 15.7% from a year earlier but its second straight quarter above 1 trillion won, The Korea Herald reported.

Regulators are pressing the groups on other fronts. At a meeting with the heads of eight financial holding companies on Oct. 28, Financial Supervisory Service Gov. Lee Chan-jin told boards to take a bigger role in cybersecurity after a string of data leaks, and called for fairer, more transparent selection of subsidiary chief executives, The Korea Times reported.

KB's results follow data showing the Korean economy grew 1% in the third quarter, triple the Bank of Korea's forecast. The next date on the sector's calendar is Nov. 5, when, according to The Korea Times, Financial Services Commission Chairman Lee Eog-weon is due to meet the chief executives of the five largest commercial banks and industry association heads on defenses against AI-driven cyberattacks.