Banks report record quarter on stock trading and NIM jumps

Korea’s banking groups have been doing well as stock trading has boomed and margins on lending have improved.

Shinhan Financial Group posted 1.19 trillion won ($1.06 billion) of net income in the first quarter, up 27.8 percent on year, the group said in a regulatory filing Friday. It was a record for quarterly net profit.

The income is 10 percent above FnGuide’s market consensus.

The group's interest income grew 5.7 percent on year to 2.12 trillion won. Its non-interest income soared 40.4 percent to 1.03 trillion won, boosted by the stock market rally.

The group's net interest margin (NIM) –- the difference between interest paid and interest received -- rose to 1.81 percent in the quarter that ended March, from 1.76 percent in the fourth quarter of last year.

Over the same period, Shinhan Bank’s NIM increased from 1.34 percent to 1.39 percent.

Shinhan Bank's net profit was 656.4 billion won in the first quarter, up 4.8 percent on-year, largely due to increased lending.

Net profit of Shinhan Financial Investment, the brokerage, rose 248.1 percent to 162.4 billion won.

On Thursday, KB Financial Group and Woori Financial Group also posted record quarterly earnings.

KB Financial Group posted net income of 1.27 trillion won in the first quarter, up 74.1 percent from a year earlier. The result was 17 percent above market consensus of 1.08 trillion won.

The group's NIM grew from 1.75 percent in the fourth quarter of last year to 1.82 percent in the first quarter. Over the same period, the NIM of KB Kookmin Bank increased from 1.51 percent to 1.56 percent.

KB Securities helped drive the earnings surprise. While the brokerage posted a net loss of 21.4 billion won in the first quarter of 2020, in this year's first quarter, it reported 221.1 billion won of net income.

"The group has succeeded in diversifying its sources of profit," said Kim Su-hyun, a research fellow at Shinhan Financial Investment.

Woori Financial Group reported 671.6 billion won in net income, the largest quarterly profit since the company returned to a holding company structure in 2019.

It wasn't a record-high quarter for Hana Financial Group, but the company also reported strong year-on-year growth in the first quarter.

Hana Financial Group reported on Friday that it achieved 834.4 billion won in net income in the latest quarter, a 27 percent increase from the same quarter the previous year. The group said major drivers were increased lending and commission earnings at its brokerage.

Net income of Hana Financial Investment shot up by 192.9 percent to 136.8 billion won.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]