Financial holding companies report a strong second quarter
Financial holding company sales rose by triples digit in the second quarter, according to preliminary reports, though profits were held back by foreign-exchange losses and reserves for bad debts.
KB Financial Group reported 1.34 trillion won ($1.03 billion) in net profit in the second quarter, up 8.33 percent on year, on sales that soared 110 percent to 25.74 trillion won, according to the report Thursday. The operating profit was 1.6 trillion won, down 4.39 percent, short of the 1.86 trillion-won consensus from market tracker FnGuide.
KB said a slowdown in financial market and reduced demand for financial products contributed to the group's lower profit. Its subsidiaries include KB Bank and KB Securities.
Shinhan Financial Group reported 1.34 trillion won in net profit in the second quarter, up 4.85 percent on year, according to the report Friday. Sales were up 123 percent in the same period to 18.66 trillion won. The operating profit was 1.75 trillion won, up 3.29 percent on year, but lower than the 1.8 trillion won-consensus.
Shinhan, whose subsidiaries include Shinhan Bank and Shinhan Card, cited reduced profit from non-interest business and appropriation of funds for Covid-19 impacts.
Hana Financial Group reported 847.64 billion won in net profit in the second quarter, down 9.14 percent on year on sales that jumped 209.43 percent to 20.9 trillion won. The operating profit was 1.14 trillion won, down 11.14 percent from the same period a year prior, compared to the 1.25 trillion won consensus.
Woori Financial Group reported 13.75 trillion won in sales, up 213 percent on year. Its net profit was 986 billion won, up 21 on year. The operating profit was up 15 percent to 1.2 trillion won,matching the 1.2 trillion won-consensus.
At a time of rising benchmark interest rate, banks were discouraged by the Financial Supervisory Service (FSS) from raising loan interest rates too rapidly at a time of global steep inflation.
"Criticism of the excessive pursuit of profit by banks is rising as rate difference on deposit and loan interest tends to rise at a time of increasing interest rate," said FSS Gov. Lee Bok-hyun in a meeting with banks CEOs on June 20. "There is a need to calculate and operate interest rate in accordance with reasonable and transparent standards."
The Financial Services Commission plans to encourage banks to offer support for the self-employed to prevent insolvency.
The average rate for unsecured loans by KB Kookmin Bank, Shinhan Bank, Woori Bank, KEB Hana Bank ranged between 4.26 percent to 4.86 percent in June, according to the Korea Federation of Banks. A year ago in the same month, the rate ranged between 2.98 percent to 3.35 percent.
The base interest rate was 0.5 percent in June last year, while the current rate stands at 2.25 percent.
BY JIN MIN-JI [email@example.com]