Bank groups’ profits rise despite market slumpDespite unfavorable market conditions including low interest rates, profits increased for leading banking groups in the first quarter of this year, largely due to more household borrowing that continues to break new records and pre-emptive restructuring on insolvent corporate lending.
On Thursday, the three major banking groups - KB Financial Group, Shinhan Financial Group and Woori Bank - announced their first-quarter performance.
Among the three, Woori Bank reported an earnings surprise, as its net profit surged 52.4 percent year on year to 443.3 billion won ($391 million). Compared to the previous quarter, net profit surged 102.4 percent.
“Even under difficult market conditions, loans grew at an appropriate level of 1.4 percent while the net interest margin improved, and this contributed to the increase in our earnings made from the interest difference,” a Woori Bank official said.
In the first quarter, the bank’s earnings, from the difference between loan interest they received from clients to deposit interest payments, grew 9.4 percent, or 106.9 billion won, to 1.24 trillion won. The bank said it was able to reduce overdue payments through pre-emptive risk management.
The situation is similar at Shinhan Financial Group. Although not as large as Woori’s, Shinhan’s net profit in the first quarter increased 30.3 percent to 771.4 billion won. Compared to the previous quarter, it surged 90.9 percent.
Its flagship Shinhan Bank saw its net profit grow 47.4 percent year on year to 574.9 billion won. When compared to the previous quarter, it surged 142.7 percent.
The bank also reported an improved net interest margin and an increase in loans. The earnings it made from interest grew 4.8 percent year on year to 1.07 trillion won.
However, KB Financial Group saw its net interest rate fall 9.9 percent to 545 billion won. When compared to the previous quarter, it grew 57 percent.
The banking group said its net profit shrank this year because a year ago, net profit surged largely because of the corporate tax refund.
“If you take out the 180 billion won refund, this year’s net profit actually increased by 28.8 percent,” a KB official said.
BY LEE HO-JEONG [firstname.lastname@example.org]