Finance sector sees healthy rise in assets in first half

Financial Supervisory Service building in Yeouido, western Seoul. [YONHAP]

Assets of financial holding companies increased 7.4 percent in the first half compared to six months earlier as demand for loans rose, Financial Supervisory Service (FSS) data showed Tuesday.

Total assets of the 10 financial holding companies increased 194 trillion won ($164 billion) to reach 2,823 trillion won. The 10 companies are KB, Shinhan, Nonghyup, Woori, Hana, BNK, DGB, JB, Korea Investment and Meritz Holdings.

By categories, assets owned by investment firms grew the fastest — increasing 18.9 percent or 48.3 trillion won. This was due to an increase in the value of equities they hold and increases in deposits by retail investors for stock trading.

Assets of commercial banks increased by 6.5 percent or 128.6 trillion won from a surge in loans.

At credit card companies, assets grew by 7.1 percent or 10.3 trillion won from January to June. For insurance companies, assets increased by 3.7 percent or 8.2 trillion won over the same period.

Net profits of the 10 holding companies dropped 11 percent or 943 billion won to reach 7.63 trillion won in June. Investment firms saw the largest drop of 29.1 percent or 518.8 billion won, as fund investments and trading suffered losses in the first half.

Net profits at commercial banks dropped 14 percent or 895.1 billion won as banks accumulated more reserves to prepare for coronavirus uncertainties and possible bad loans.

Insurance companies and credit card companies, on the other hand, saw net profits increase by the double digits. The net profit at insurance companies increased 158.2 billion won or 26.9 percent. At credit card companies, net profits rose by 254.2 billion won or 25 percent over the six-month period.

Asset quality also improved. The substandard-or-below loans ratio dropped by 0.03 percentage points compared to the end of last year and reached 0.55 percent in June. This means that the ratio of loans expected to result in a loss of interest for the lender has decreased over the past six months.

The coverage ratio, which indicates a company’s ability to handle its outstanding debt, increased by 5.33 percentage points to 128.62 percent.

The FSS said it will supervise financial holding companies to prepare for economic uncertainties that can rise from the pandemic.

“We will guide them to strengthen their ability to absorb losses by saving more reserves, expand their capital and liquidity and prepare for another surge in Covid-19 cases,” said Kim Taek-ju, a spokesperson for the FSS.

BY KANG JAE-EUN [kang.jaeeun@joongang.co.kr]