- Published 2026.10.30 08:44
Third-quarter cumulative net profit improves to 331.7 billion won
Reduced loan-loss provisioning is the key driver of profit growth
Delinquency falls but NPL ratio rebounds, raising asset quality concerns
KB Kookmin Card posted strong third-quarter results this year, but behind the numbers lies an accounting illusion that has deferred potential credit risk. The headline delinquency rate fell and appeared stable, yet the ratio of substandard-or-below loans (NPLs) — debt with principal or interest overdue by three months or more — rebounded. The card industry's recession-style management strategy of defending profit by reducing provisions has exposed the limits of credit risk control centered on vulnerable borrowers.
According to KB Kookmin Card's results released on Oct. 29, third-quarter net profit rose 13.6% year on year to 112.8 billion won (about $83 million). Cumulative net profit for the first three quarters also climbed 18.2% to 331.7 billion won (about $245 million), surpassing last year's full-year net profit in just nine months. Growth in card spending and the installment finance business underpinned the top line.
But the core driver of the earnings improvement was tighter control of selling, general and administrative expenses and a reduction in credit loss provisions. On a cumulative basis through the third quarter, credit loss provisioning fell 2.0% year on year to 537.1 billion won (about $396 million). With funding costs still elevated and interest expense pressure unresolved, the company lifted operating profit by setting aside less in provisions.
From a credit rating perspective, the key point is the divergence among asset quality indicators. The delinquency rate at the end of September stood at 1.02%, down 0.05 percentage point from the previous quarter-end and 0.19 percentage point from a year earlier. Judging only by the visible delinquency rate, bad debt management appears to be proceeding systematically.
However, the NPL ratio, which reflects actual risk of loss, came in at 1.00%, up 0.07 percentage point from 0.93% at the end of the previous quarter, turning higher again. Card companies typically carry out large-scale write-offs and sales of bad debt at each quarter-end to clean up the denominator of the delinquency rate. They transfer long-overdue receivables to external collection agencies or asset-backed securitization vehicles to pull down the on-book delinquency rate.
The fact that the NPL ratio rose despite write-offs and sales indicates that short-term delinquencies of less than one month are becoming entrenched as structural long-term bad debt of three months or more at a faster pace within the asset portfolio. This contrasts with some large competitors that are defending asset quality by keeping their NPL ratios in the high 0% range.
Given the current asset structure of the card industry, reducing provisioning could constrain future loss-absorbing capacity. The repayment burden on marginal borrowers such as multiple-debt borrowers and self-employed business owners remains at its limit. With the economic recovery delayed, the risk of bad debt contagion among potential debtors tied up in refinancing loans or revolving credit balances has not been resolved. The decision to defend near-term net profit by setting aside fewer provisions could ultimately cause credit loss shocks to hit all at once over the long term.
Ultimately, amid pressure from rising funding costs, the level at which the company maintains its fundamental asset recovery capacity and provision coverage ratio will determine future earnings. If asset quality deterioration among vulnerable borrowers continues in the fourth quarter and the NPL balance keeps growing, suppressed credit costs could surge at once and shake the profit structure. The real credit cost burden hidden behind the surface-level decline in delinquency and the pace of asset cleanup will be the indicators to gauge fourth-quarter profitability.
(Dollar figures are approximate, converted automatically at 1,000 won = $0.738, the rate on Nov. 8, 2026.)
※ This article is an AI translation of the Korean original published by Korea Credit News; it was checked by automated quality guards and published by the English edition desk.
