On Friday, KB Financial Group Inc ADR (NYSE:KB) reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Unidentified Analyst – SK Securities: I have the following two questions. First of all, many investors I’m sure are mostly interested in this topic, it has to do with the ING Life Korea related acquisition prospects. Can you give us some update on the progress to-date to the level that you could disclose? Secondly at FSS, it has actually announced new guidelines on the loan spread. So based on the recently announced guidelines, do you have any guidance that you could provide for us regarding NIM outlook for next year?
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Dong Chang Park – CSO: My name is Dong Chang Park, the CSO of KBFG. First of all regarding the acquisition of ING Life Korea, we have submitted the offer on July 16th of this year and we are continuing the negotiation with the seller side. To-date we have achieved quite a bit of progress. However, still we are midst of the negotiations at the moment, so please understand the fact that we cannot disclose any further details at this point from KB’s perspective as we have emphasized over and over again. Our top priority always is maximize the shareholder value. So we hope and we will do our best to make sure this possible discussion will lead to such expansion of shareholder value. Yes. Let me also address your question regarding NIM outlook. As you said FSS today has announced their guidelines on the loan spread and loan related practice. Regarding 4Q NIM outlook for instance, on the 17th of October, the policy rate in Korea was dropped. So in the case of the one-year dated bonds. I think that in the past, I think that the market response is that the market response was too radical every time the policy rate has come down. But so we had not actually lower the rate too much, but in the CD rates, I think that during Q4, we might have some negative impact on NIM by about 3 to 4 basis points. At the last quarter’s earnings call, last quarter we have given you the guidance of 2.9% NIM outlook going forward, but I think that it could be slightly lower than that figure. Regarding the recently announced guidelines by FSS, it has limitations on the loan spread and also regarding the disclosures to the consumers about the comparison (twist) regarding the loan spreads between banks. So I think that that could have some negative impact on the pricing. So, of course, we are in the middle of the review process for the business plans for next year. So next year or at this year, I think that the market expects additional 25 basis points policy rate drop going forward. So, accordingly, if you look at the recent trends coming from FSS, I think that it would be unavoidable to experience some NIM contraction. So, of course, we have to wait and see, but next year’s NIM would be around 2.8% range.
Chung-uk Choi – Daishin Securities: My name is (Chung-uk Choi), Daishin Securities. It seems like you’re selling more of these qualified loans compared to other banks. So for 2012 and 2013, do you have an internal target that you’re shooting for and in terms of the recovery of the written offs, I think that the recovery rate is going lower. Is there any reason behind that? Is that because of the economic recession? I think there is also a corporate tax impact and in terms of the reversal of the guarantee allowances, can you provide little more color on these topics?
Jong-Kyoo Yoon – Chief Financial Officer: In terms of the qualified loans, as you know Korea Housing Corporations qualified loan is about 4.25% that’s the rate. So I feel there is a lot of customers for those people who actually qualify for these types of loans wants to convert to disqualified loans. So that is I think the fact we are thinking of this from two different perspectives. Out of our existing customers and who wish to convert, we have to provide reports so that we can expand the options for these existing customers. From a long-term perspective and we are looking at how the interest rates trend is going to play out. For instance if the interest rate is going to be low for quite some time, I believe that for these qualified loans and our strategies regarding the qualified loans we would have to consider whether we’re going to be more aggressive on qualified loans or on our own on independent products, but if it’s not going to be low interest rate environment for long time then it’s – if we sold too much of a low-rate products now then it’s going to be burden at a later time. So for the time being we’re going to trying to sell little more qualified loan. So on a quarterly basis, we’re looking at the sales performance of these qualified loans and we’re looking at those numbers as well as we’re very flexible with the limit. In terms of next year’s sales volume, we haven’t set any specific target. We will be mindful of the interest rate movement going forward and according to that number, we’re going to determine the adequate size of the qualified loans. So we will be very flexible and agile in looking at the quarterly movements of the interest rates and respond accordingly. In terms of your – the questions on the recoveries of these written-off receivables. Internally, we have a credit rating subsidiary who is working quite hard, so yes, we are slightly below the target that we’ve set for ourselves, but when it comes to the collections or the recoveries, I believe that we have a very effective scheme in place, management in place. So regarding these receivables, I think we should put a little effort in orders so that we can increase the recovery rate. Regarding the third question on Q3, out of the allowances for payment guarantees and for specific receivables, it’s difficult to name specific names of a company. But with regard to issuance of (LGs), there was a lawsuit and we actually won in that lawsuit and there was a reversal of about KRW50 billion from that winning of the lawsuit. In the Q3 there were some of the problematic companies like (indiscernible) Construction and (indiscernible) Construction and (indiscernible). So these are quite sizable Korean companies that have recently gone into court receivership. So with regards to the reserving and provisioning for these companies, we have a reflected fully the potential loss that arise from these problematic companies. For specific items, and if you would just contact our IR team and because we have to name specific company names, I don’t think this is the right venue for me to actually talk about this. So please do contact us later on.