4 major financial groups are expected to report record earnings for the first half of the year, drawing attention to the competition between KB Financial Group and Shinhan Financial Group for the title of 'leading financial group.' While KB Financial is anticipated to maintain its lead, Shinhan is also showing strong performance, continuing to close the gap. With financial authorities tightening household loan management, the competitiveness of the non-bank sector has emerged as a key variable in this competition.
According to financial information provider FnGuide on July 11, the projected cumulative net profits for KB Financial and Shinhan Financial in the first half of the year are 3.7698 trillion won and 3.3070 trillion won, respectively. Both financial groups are likely to achieve their highest-ever earnings for the first half, but analysts suggest that KB Financial is more likely to retain its leading position.
The difference in first-half performance between the two groups is attributed to the non-bank sector. KB Financial's net profit for the first quarter was 1.8924 trillion won, surpassing Shinhan Financial's 1.6226 trillion won by 269.8 billion won. Non-bank operations accounted for 43% of KB Financial's total net profit, while Shinhan Financial's non-bank share remained at 32%. The profitability of non-bank affiliates has thus contributed to the performance gap between the two groups.
As a result, industry experts believe that the non-bank sector will continue to be a crucial factor in the competition for leading financial status in the second half of the year. With the government's strengthened household debt management and the potential slowdown in interest income growth due to falling benchmark rates, the contributions of non-bank affiliates in asset management, investment banking, securities, credit cards, and insurance are expected to become increasingly important.
Both companies are accelerating efforts to enhance their competitiveness in the non-bank sector as a key driver for performance improvement. While banks face limitations in differentiating their performance due to loan and capital regulations and interest rate fluctuations, non-bank sectors have a higher likelihood of maintaining market share and profitability over the long term if they secure competitiveness, making them a critical business area influencing overall group performance.
KB Financial is focusing on strengthening its securities competitiveness. On June 26, KB Financial's board approved a capital increase of 1 trillion won, following a 700 billion won increase in February, bringing the total capital raised to 1.7 trillion won. This will elevate KB Financial's equity capital to the 80 trillion won range. The funds will be used to establish a foundation for its integrated investment account (IMA) business, enhance corporate finance competitiveness, and expand its issuance of commercial paper.
Shinhan Financial is emphasizing the expansion of synergies among its affiliates. The recently revamped 'Shinhan Super SOL' aims to connect bank and credit card customers with non-bank services such as securities and insurance, broadening the overall revenue base of the group. Analysts suggest that Shinhan Financial's consideration of acquiring Lotte Insurance is also part of its strategy to strengthen non-bank competitiveness and narrow the performance gap with KB Financial.
A financial industry official stated, "Due to regulations and interest rate environments, banks are increasingly facing similar revenue structures, making it difficult to achieve significant differentiation. The competitiveness of non-bank portfolios is likely to continue widening the gap between financial groups."
According to financial information provider FnGuide on July 11, the projected cumulative net profits for KB Financial and Shinhan Financial in the first half of the year are 3.7698 trillion won and 3.3070 trillion won, respectively. Both financial groups are likely to achieve their highest-ever earnings for the first half, but analysts suggest that KB Financial is more likely to retain its leading position.
The difference in first-half performance between the two groups is attributed to the non-bank sector. KB Financial's net profit for the first quarter was 1.8924 trillion won, surpassing Shinhan Financial's 1.6226 trillion won by 269.8 billion won. Non-bank operations accounted for 43% of KB Financial's total net profit, while Shinhan Financial's non-bank share remained at 32%. The profitability of non-bank affiliates has thus contributed to the performance gap between the two groups.
As a result, industry experts believe that the non-bank sector will continue to be a crucial factor in the competition for leading financial status in the second half of the year. With the government's strengthened household debt management and the potential slowdown in interest income growth due to falling benchmark rates, the contributions of non-bank affiliates in asset management, investment banking, securities, credit cards, and insurance are expected to become increasingly important.
Both companies are accelerating efforts to enhance their competitiveness in the non-bank sector as a key driver for performance improvement. While banks face limitations in differentiating their performance due to loan and capital regulations and interest rate fluctuations, non-bank sectors have a higher likelihood of maintaining market share and profitability over the long term if they secure competitiveness, making them a critical business area influencing overall group performance.
KB Financial is focusing on strengthening its securities competitiveness. On June 26, KB Financial's board approved a capital increase of 1 trillion won, following a 700 billion won increase in February, bringing the total capital raised to 1.7 trillion won. This will elevate KB Financial's equity capital to the 80 trillion won range. The funds will be used to establish a foundation for its integrated investment account (IMA) business, enhance corporate finance competitiveness, and expand its issuance of commercial paper.
Shinhan Financial is emphasizing the expansion of synergies among its affiliates. The recently revamped 'Shinhan Super SOL' aims to connect bank and credit card customers with non-bank services such as securities and insurance, broadening the overall revenue base of the group. Analysts suggest that Shinhan Financial's consideration of acquiring Lotte Insurance is also part of its strategy to strengthen non-bank competitiveness and narrow the performance gap with KB Financial.
A financial industry official stated, "Due to regulations and interest rate environments, banks are increasingly facing similar revenue structures, making it difficult to achieve significant differentiation. The competitiveness of non-bank portfolios is likely to continue widening the gap between financial groups."
* This article has been translated by AI.
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