Foreign banks in Korea see their profits drop 16%
Foreign bank branches in Korea saw their net fall 16.2 percent in 2011 from a year earlier due mainly to a decline in profit from stock investments and interest earnings, the financial regulator said yesterday.
The combined net income of 38 foreign lenders’ local branches reached 1.23 trillion won ($1.1 billion) in 2011, compared with 1.47 trillion won in the previous year, according to preliminary data by the Financial Supervisory Service.
Of the total, 33 foreign bank branches reaped profits, but five others ended the year in negative territory, it added.
“While profit from derivatives investment increased, those from interest and stock investment slipped as banks scaled back arbitrage volume and saw a rise in yields,” an FSS official said.
The regulator said the weaker bottom line was largely attributed to a sharp fall in interest income of U.S. and European investment banks.
Asian lenders, in contrast, saw a marginal increase in their interest profit as they expanded investment in local assets, it added.
A total of 54 domestic outlets run by 38 overseas banks were in operation in Korea as of the end of December.
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