With a 330% Leap in Profits, Banks Mark Best 1st Half Ever

Commercial banks have made a sharp turn in performance in the first half of the year, the Financial Supervisory Service said Monday. The combined profit was the largest semiannual in history - nearly 3 trillion won ($2.3 billion).

The financial regulator's preliminary results showed that the total profit jumped by 330 percent in the first half to 2.98 trillion won, compared with 688 billion won in the same period last year. Just two banks - Daegu Bank and Cheju Bank - recorded net losses.

The list was topped by the two banks that are set to merge in October, Kookmin Bank and H&CB. Kookmin posted 639 billion won in profit for the period while H&CB recorded 526 billion won in net profit. "We are projecting to surpass our target profit of 1.05 trillion won this year," said an official at Kookmin.

The head of banking analysis at the financial agency, Choi Tae-mun, said, "The quality of banks' asset holdings is improving, and that is helping them improve operational efficiency."

Shinhan Bank recorded a 700 percent increase in net profit and posted 258 billion won. Eight banks, including Hanvit Bank, Kwangju Bank, Kyongnam Bank, and Peace Bank, and the National Agricultural Cooperative Federation and the National Federation of Fisheries Cooperatives returned to profitability in the period.

Daegu Bank said it is making a quick recovery from the 86 billion won in losses recorded in the first quarter largely arising from the sale of insolvent assets.

"Profit numbers have averaged about 26 billion won each month in the second half," an official at the bank said. The financial agency said preliminary results show the bank recorded 40 billion won in net losses in the first half of the year.

Cheju Bank's 12 billion won in net losses is primarily due to the write-offs of bad loans and additional provision for loan losses.

by Huh Kwi-sik