Jakarta. KB Bank, also known by its ticker symbol BBKP, revealed that its loan at risk (LAR) ratio stood at less than 35 percent as of the end of the first quarter of 2024.

The bank attributed the low LAR ratio to its efforts in improving its fundamentals and asset quality. This also marks a steady decline compared to the end of 2023, during which the LAR ratio was around 40 percent, and 50 percent by the end of 2022. Even at the onset of KB Bank's transformation period in 2021, or a year after KB Kookmin Bank became the controlling shareholder, KB Bank's LAR ratio briefly reached 65 percent.

One of the improvements in KB Bank's LAR ratio is driven by the transfer of low-quality assets worth Rp 2.87 trillion, through the Asset Back Securities (ABS) scheme, which is a continuation of the asset quality improvement program initiated by KB Bank since the transformation period in 2021. 

“The positive performance achievement of KB Bank further makes us more optimistic about expanding credit with better quality, targeting growth in the SME and retail segments this year by making the wholesale segment an anchor for the business ecosystem,” KB Bank’s vice president director Robby Mondong was quoted as saying in a recent press statement.

KB Bank is aiming to complete its asset quality improvement program by 2024. This year also marks the implementation of KB Bank's digital transformation, powered by the cutting-edge banking system adopted from its parent company, KB Kookmin Bank, and KB Financial Group, known as the Next Generation Banking System (NGBS).

KB Bank’s efforts to improve its performance is set to drive positive growth amidst a highly dynamic economic situation. The ongoing geopolitical tensions in the Middle East and the lingering inflation levels in the US pose significant challenges to the banking sector. KB Bank itself aims to achieve positive pre-provision operating profit (PPOP) in 2024, and positive net income in 2025.

Fitch Ratings recently gave KB Bank’s national rating at the ‘AAA’ level with a stable outlook. 

“As KB Bank’s performance continues to improve, we believe we can achieve sustainable growth,” Robby said.