KB Financial Group said on Wednesday it posted 1.8924 trillion won in net profit for the first quarter. Despite increased volatility in financial markets, higher fee income at affiliates including banking, securities and asset management led the results.

The contribution from non-bank units increased. Within the group, non-bank units' contribution to fee income rose to 72 percent and their contribution to net profit climbed to around 43 percent. The banking unit managed funding costs by expanding core deposits, while the securities and asset management units reflected the impact of higher fee income from increased trading value.

Key soundness and capital indicators also stayed at stable levels. As of end-March, the common equity tier 1 ratio was 13.63 percent and the BIS capital ratio was 15.75 percent. The cost-income ratio, or CIR, stood at 35.4 percent. Return on equity, or ROE, was 13.94 percent.

Net interest margin showed an improving trend. First-quarter group net interest margin was 1.99 percent and the bank's margin was 1.77 percent, up 4 basis points and 2 basis points, respectively, from the previous quarter. The credit cost ratio, or CCR, improved 14 basis points from a year earlier to 0.40 percent.

KB Financial said it created 828.6 billion won in social value during the first quarter. It said financial support and social contribution activities were carried out, focusing on support for young people and small and medium-sized companies and self-employed business owners, regional revitalisation and public safety.

Over the same period, ROE rose 0.9 percentage point from a year earlier to 13.94 percent. CIR stayed at a stable level of 35.4 percent. As of end-March, the CET1 ratio and BIS ratio were tallied at 13.63 percent and 15.75 percent, respectively.

Net interest income increased 2.2 percent from a year earlier to 3.3348 trillion won. Interest income stayed stable as net interest margin improved on the back of lower funding costs from expanding core deposits. Group NIM was 1.99 percent and the bank's NIM was 1.77 percent, up 4 basis points and 2 basis points, respectively, from the previous quarter.

Net fee income rose 45.5 percent from a year earlier to 1.3593 trillion won. Fee income at capital market-related affiliates such as securities and asset management increased sharply, and the bank's wealth management fees also rose.

Other operating profit fell 18.5 percent from a year earlier to 291.6 billion won. Despite trading and derivatives-related profit and loss, it was affected by expanded valuation losses on securities due to higher exchange rates and interest rates, and a decline in insurance profit and loss.

General and administrative expenses increased to 1.7649 trillion won. It reflected the impact of higher taxes and dues following a tax system overhaul. CIR stayed around 35.4 percent due to cost-efficiency efforts.

Provision for credit losses was tallied at 493.2 billion won, and the credit cost ratio was 0.40 percent. The burden eased from a year earlier due to base effects and the impact of pre-emptive provisioning.

As of end-March, the group's total assets increased from the end of last year to 829.7 trillion won. Total assets including assets under management were tallied at 1,600.2 trillion won. AUM was 770.5 trillion won, reflecting increased assets in the securities and asset management units.

Asset quality also stayed stable. The non-performing loan ratio was 0.73 percent and the NPL coverage ratio was 127.1 percent.

The CET1 ratio and BIS ratio, indicators of capital adequacy, stayed at stable levels at 13.63 percent and 15.75 percent, respectively.

Na Sang-rok (나상록), KB Financial's chief financial officer and executive vice president, said the group actively used the wave of money moving, which could be seen as a crisis in the traditional banking industry, as an opportunity to maximise profitability in non-interest and non-bank businesses, upgrading the group's overall fundamentals. Diversifying and strengthening the earnings structure would be a strong driver of sustainable growth to enhance shareholder and corporate value, he said.