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Kookmin Bank 30 June 2008

Update Report – 1Q 08 Results

Focus on growing non-banking businesses to support long term growth

Common BUY Fundamental research indicates an 18% upside in the common stock over the next 6–12 months. We
have calculated the target price based on fundamental factors, using a weighted average of target
Stock prices obtained through DCF and comparative valuation methodologies.

Ticker: 060000.KS
Target price: KRW72,900 We reiterate the common stock a BUY on fundamental grounds, with a 6-12 month target price of
Current price: KRW61,700 KRW72,900.

ADR BUY The ADR is expected to appreciate by approximately 70% over the next 6–12 months. In addition to
the 18% fundamental upside, we anticipate around 52 percentage points’ further upside attributable
purely to the appreciation of the Korean won against the US dollar over the same period. We continue
to value the company over 6-12 months, as we anticipate a significant currency impact on the ADR in
Ticker: KB the medium term1.
Target price: US$100.14
Current price: US$58.86 We reiterate the ADR (1 ADR = 1 common share) a BUY, with a 6-12 month target price of US$100.14.

Supervisor: Somnath Banerjee

Analyst: Vishal Narnolia Investment horizon - short term actionable trading strategies
Editor: James Smithies This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this
Global Research Director: report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
Satish Betadpur, CFA short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
readers with a shorter trading horizon. These are available online only at www.researchoracle.com.
Next news due: 2Q 08 results, 29
July-02 August 2008
Report summary
Kookmin Bank’s (Kookmin) 1Q 08 Net Interest Income (NII) and adjusted2 net income were both short
of our estimates, despite growth in the loan portfolio, due to lower Net Interest Margin (NIM) and a
decline in non-interest income. Despite growth in the bank’s loan portfolio, the bank’s Non-performing
Loan (NPL) ratio improved to 0.79% (1.0% in 1Q 07), reflecting improvement in asset quality. However,
on a q-o-q basis, there has been marginal deterioration in asset quality. Going forward, we remain
concerned about the possibility of higher interest rates by the Bank of Korea, in response to
inflationary pressures, which would lift the bank’s cost of funding and have a negative impact on its
NIM. However, we expect the inflationary pressure to decline, going forward, favoring the bank over the
long term. In addition, the bank’s plan to form a financial holding company and fold its credit card unit
into a new subsidiary will enable the company to focus on growing its non-banking businesses,
enhancing its future growth potential. Therefore, we believe that the Kookmin common stock
represents an attractive investment opportunity at current levels.

Currency impact for US investors1

The impact by itself of the anticipated currency movements on the ADR (now US$58.86), without
considering changes in the share price, is positive and is expected to be:

Over 6 months: US$72.59

Over 12 months: US$84.75

Page 1 Refer to page 4 for footnotes