Financial groups report strong first quarter as rates rise

From left to right are office buildings of KB Financial Group, Shinhan Financial Group, Hana Financial Group and Woori Financial Group. [KB, SHINHAN, HANA, WOORI]

KB Financial Group and Shinhan Financial Group reported more than 1 trillion won ($810 million) in net profit in the first quarter as rates rose.

KB Financial Group, the biggest financial holding firm in the country, reported 1.46 trillion won in net profit in the January-to-March period, up 14 percent on year, according to a tentative earnings report released on Friday.

Its operating profit was 1.9 trillion won, up 9 percent on year, beating the 1.76-trillion-won consensus compiled by FnGuide.

The company cited the growth of loans and an increase in the net interest margin as core reasons for the strong results.

The Bank of Korea raised its base rate to 1.5 percent earlier this month. It was the second increase this year and the fourth in this round of tightening, which began in August 2021 after the rate dipped to a record low of 0.5 percent following the pandemic outbreak.

"Impacts of the two rate increases will start to be reflected in the second quarter, so banks are projected to see their earnings increase," said Park Hye-jin, an analyst at Daishin Securities, referring to the two increases this year.

KB Kookmin Bank led the holding firm's earnings with 974.5 billion won in net profit, up 41 percent on year. KB Securities reported 115.9 billion won in net profit, down almost 50 percent on year. The company cited low stock trading volumes as one of the reasons for the dip.

KB Financial Group said its net interest margin was 1.91 percent in the first quarter, up 0.06 percentage points from the previous quarter.

Shinhan Financial Group reported 1.42 trillion won in net profit in the first quarter, up 16.64 percent on year.

Its operating profit was 1.91 trillion won, up 13.3 percent on year and beating a 1.74-trillion-won consensus.

The company said increased lending to small merchants hit by Covid-19 supported its profits. Interest income in the first quarter was up 17.4 percent on year to 2.5 trillion won.

Shinhan Bank's net profit in the first quarter was 863.3 billion won, up 31.5 percent on year.

Net profit at Hana Financial Group and Woori Financial Group were below 1 trillion won.

Hana Financial Group reported 914.7 billion won in net profit in the first quarter, up 7.35 percent on year. Woori Financial Group reported 917.53 billion won in net profit in the first quarter, up 27.64 percent from the year-earlier period.

Hana Financial Group reported 1.1 trillion won in operating profit, up 2.22 percent on year, and above the 1.07 trillion won consensus. Operating profit at Woori Financial Group was 1.23 trillion won compared to a 1.14-trillion-won consensus.

Net profit at Hana Bank was 669.4 billion won, up 15.9 percent on year, while Woori Bank reported 764.5 billion won in net profit, up 29.2 percent on year.

BYJINMIN-JI[jin.minji@joongang.co.kr]