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Maintain Buy and TP of W216,000

We maintain our Buy rating on KB Financial Group (KBFG) with a target price of W216,000, which is based on a P/B of 1.2x and our 2026F BPS. We kept our target multiple unchanged due to KBFG’s industry-leading capital position, which gives it the greatest capacity for shareholder returns in the sector. For 2026, we project the shareholder return ratio to reach 60.6% based on dividends and new buybacks/cancellations, rising to 83.0% when the cancellation of treasury shares already held is included. With our target price implying 36.7% upside, we maintain KBFG as our top pick in the sector.

1Q26 review: In line with our estimates and above consensus

For 1Q26, KBFG reported net profit attributable to owners of the parent of W1.89tr, in line with our estimate of W1.81tr and above the consensus of W1.79tr. Interest income rose 2.2% QoQ, supported by a 4bp improvement in group NIM, while non-interest income grew strongly (+27.8% YoY, +45.7% QoQ). Despite FX headwinds and regulatory changes, the CET1 ratio remained resilient at 13.63%, in line with our estimate.

Shareholder return ratio likely to reach 60.6% in 2026

For 2026, we forecast the shareholder return ratio to reach 60.6% on a buyback basis (which includes dividends and new share buybacks/cancellations). We project cash dividends of W1.74tr and new share buybacks/cancellations of W2.06tr, implying a shareholder return yield of 7.1% on a buyback basis. Including the recently announced cancellation of W1.4tr in treasury shares already held, we expect the shareholder return ratio and yield to reach 83.0% and 9.6%, respectively.

Meanwhile, financial authorities recently announced measures to revise banking capital regulations to support productive finance, including refinements to the recognition of operational risk losses and expanded approval of structural FX positions (effective from April). As a result, commercial banks, including KBFG, should be able to maintain high and stable capital ratios even as they actively expand productive finance.