Jakarta. KB Bank announced Wednesday that it had made a sukuk transaction with energy company TBS Energi Utama (TBS). 

The transaction aims to strengthen the bank’s financial fundamentals by optimizing asset quality through an asset swap scheme. As part of the freshly inked agreement, non-productive assets, including a portfolio of non-performing loans (NPL) and written-off loans, get exchanged for productive assets in the form of sukuk issued by TBS. 

This transaction is part of KB Bank’s strategy to improve asset portfolio quality, enabling the recovery of non-productive assets while increasing the proportion of productive assets and creating greater room for net interest margin (NIM) growth. This healthier asset composition will grant KB Bank better flexibility in credit distribution and improved long-term profitability. 

“Optimizing assets through this asset swap scheme is a concrete step in KB Bank’s transformation and turnaround efforts towards sustainable profitability. We are replacing non-productive assets with Sukuk, which have a more stable value, thereby strengthening our financial structure and fostering healthier growth,” KB Bank’s president director Tom (Woo Yeul) Lee was quoted as saying in a press statement. 

Since initiating its transformation after becoming part of South Korea’s largest financial institution KB Financial Group, KB Bank has consistently implemented various strategic measures to improve asset quality, enhance liquidity, and strengthen operational efficiency. By 2024, the publicly listed company under the ticker symbol BBKP posted a net interest income (NII) of Rp 909 billion, marking a 49.20 percent year-on-year growth.

KB Bank attributed this growth to its measured expansion strategy, efficient cost control, and efforts to improve its asset quality. The loan-at-risk (LAR) ratio dropped from 39.77 percent in 2023 to 23.10 percent the following year. Similarly, the NPL ratio improved, with the gross NPL ratio declining to 8.74 percent from 9.70 percent the previous year. The net NPL ratio had also gone down from 4.95 percent to 4.38 percent. As a result, KB Bank improved its NIM to 1.31 percent in 2024, up from 0.78 percent in the previous year. 

Driving Sustainable Growth

This asset swap transaction marks a significant milestone in KB Bank’s recovery journey while reinforcing its vision to become the leading banking service provider. KB Bank continues to leverage financial innovation to manage risks and enhance capital efficiency. The Sukuk-based asset swap scheme not only serves as a risk mitigation strategy for non-productive assets. The bank said that it reflected its commitment to implementing a healthier, more sustainable, and profitable growth strategy for both shareholders and customers.

KB Bank reported that the many strategic initiatives it had made began to yield positive results in 2025. In the first two months of the year, KB Bank recorded cumulative net profit, signaling the start of a stronger recovery trend. Significant improvements in asset quality and operational efficiency have been key drivers in enhancing the bank’s profitability. 

KB Bank also seeks to complete the implementation of its Next Generation Banking System (NGBS) in early Q2 2025. This system is expected to bring transformative changes to the bank’s operations, offering more efficient processes and delivering faster, safer, and more convenient services for customers. This digitalization initiative will further strengthen KB Bank’s competitiveness in the banking industry, which is in line with its commitment to providing modern banking services that are more responsive to market needs.

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