7 Cheap Bank Stocks To Invest In Before They Take Off

5. KB Financial Group Inc. (NYSE:KB)

Earnings Growth: 178.28%

Forward P/E Ratio: 6.69

Analyst Upside Potential: 33.37% 

KB Financial Group Inc. (NYSE:KB) is one of the largest financial services companies based in South Korea. It provides a range of banking services and financial products through its subsidiaries. The group operates Kookmin Bank, which leads its banking services, providing personal and corporate loans, deposits, and investment options to individuals and businesses. The group operates internationally with a presence in Indonesia, Cambodia, and the United States, among others.

On December 12, Morgan Stanley’s analyst Joon Seok upgraded KB Financial Group Inc. (NYSE:KB) from Equal Weight to Overweight and also raised the price target from KRW 94,000 to KRW 105,000. The analyst has placed KB as one of the top picks among the South Korean financial stocks. Moreover, in its fourth quarter 2024 investor letter, Oakmark International Fund expressed a positive outlook on KB Financial Group Inc. (NYSE:KB).

The fund noted that Korean banks generally have struggled with low returns on equity and payout ratios, however, the government’s “value up” program aimed at improving corporate governance and capital efficiency could benefit banks like KB Financial. Oakmark recognized the bank to have a robust capital position and as a low-cost deposit franchise. Here’s what the fund said about the bank:

“KB Financial Group Inc. (NYSE:KB) is a leading South Korean bank that provides a range of financial products and services, including retail banking, corporate banking, wealth management, and international banking services. Korean banks have a history of generating uninspiring returns on equity and low payout ratios (POR), and despite recent geopolitical uncertainty, there is broad support for the government’s value-up program, which aims to address these issues by encouraging better corporate governance, transparency, and improved capital efficiency. As South Korea’s largest bank, KB Financial possesses the industry’s strongest capital position, a renowned low cost deposit franchise and leading fee income, which we believe advantageously positions the company to lead the now improving banking industry in both the speed and magnitude of improvements to POR. In addition, we appreciate management’s focus on shareholder return because the anticipated growth in dividends and buybacks provides downside protection if the multiple expansion portion of the thesis sputters. Despite this compelling set-up, we were excited to purchase shares at an attractive valuation for a bank commonly acknowledged as the best bank in South Korea, per our channel checks.”