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On Wednesday, BofA Securities updated its valuation of KB Financial Group (KS:105560) shares listed on (NYSE:KB), increasing the price target to KRW118,000 from the previous KRW113,000 while reaffirming a Buy rating for the stock. According to InvestingPro data, KB Financial trades at an attractive P/E ratio of 7.32 and has delivered impressive returns of over 38% in the past year. The adjustment follows KB Financial Group’s announcement of its fourth-quarter earnings for the year 2024, which revealed a net profit of W683 billion. This figure represents a decrease of 58% from the previous quarter but a significant increase of 213% compared to the same period the year before. The reported earnings exceeded BofA Securities’ estimate of W646 billion but fell short of the Bloomberg consensus of W714 billion.
The quarterly report indicated that KB Financial Group experienced minimal changes in loan growth on a quarter-over-quarter basis and a slight expansion in the net interest margin (NIM) by 3 basis points. The easing of funding cost pressures due to lower interest rates contributed to this NIM improvement. The company maintains a solid 2.9% dividend yield and has consistently paid dividends for 16 consecutive years, as highlighted in InvestingPro’s comprehensive analysis.
A standout feature in the financial report was the W520 billion share buyback program announced by KB Financial Group. This program is scheduled to take place over the following three months and is 63% larger than the W320 billion repurchased in the first half of 2024. Notably, this buyback represents the largest single repurchase initiative ever announced by the company.
BofA Securities highlighted the significance of KB Financial Group’s shareholder-return strategy, which has consistently featured some of the largest buybacks in the history of Korean banking. Despite concerns about the company’s ability to continue scaling its shareholder returns in a traditionally conservative Korean banking market, BofA Securities believes that KB Financial Group’s latest buyback announcement serves as a reassuring signal to investors regarding the company’s commitment to enhancing shareholder value. InvestingPro analysis reveals that the stock is currently fairly valued, with 12 additional exclusive insights available to subscribers, including detailed analysis of the company’s financial health and growth prospects.
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