South Korea’s KB Financial Group Inc. expects another earnings - eying 500 billion won ($456.5 million) in net profit for the third quarter ending in September. It had reported a net profit of 1.1 trillion won, up 19.1 percent on year, for the first half this year even as most others have been struggling in prolonged low-interest environment and increasing corporate insolvencies.

The country’s top financial group’s balance sheet and capital conditions have been increasing and are well secured against losses, said Han Jung-tae, an analyst at Hana Financial Investment, adding he expects the group to post 488.2 billion won in net profit in the third quarter ending on September 30. The financial group’s core units that include bank, insurance, securities, credit card, and capital investment companies reportedly have all performed well while the top management ensured internal stability as well, market observers say.

The group is also scheduled to exchange its shares with Hyundai Securities Co. shares as part of the process to incorporate the brokerage house as a fully-owned subsidiary before the planned merger with its subsidiary KB Investment & Securities Co. in the fourth quarter this year. In August, the financial conglomerate announced to swap stocks with Hyundai Securities and buy back treasury stocks worth 500 billion won from KB Financial Group’s shareholders to prevent the dilution of shareholder value when new KB Financial shares go listed on the stock exchange.

KB Financial Group decided to launch the stock exchange program before merging Hyundai Securities and KB Investment & Securities to draw confidence from minority shareholders. The firm concluded it would be more desirable to set the stock exchange ratio based on market price.

The conglomerate acquired 29.62 percent stake in Hyundai Securities in April and it will take over remaining 70.38 percent stake on October 19 by exchanging its stocks with the brokerage’s shares in 1:1907312 ratio or simply, one KB stock for about five Hyundai Securities shares.

The financial enterprise’s capital will be increased by 158.8 billion won after the stock swap program and the number of its shares will go up by 8.22 percent while all profits earned by Hyundai Securities will be reflected in KB Financial Group’s financial statement. The acquisition of the brokerage firm is expected to add about 100 billion won profit when its previous performance is considered, market observers say.

KB Financial Group shares closed Wednesday at 38,200 won, down 450 won or 1.16 percent from the previous session.

By Park Yoon-ye

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]