4 major financial group capital firms reported a significant increase in net profit for the first half of the year compared to the same period last year. The easing of concerns over real estate project financing (PF) failures has greatly reduced the burden of setting aside provisions for bad debts.
According to the financial sector on July 27, the combined net profit of KB, Shinhan, Hana, and Woori Financial Capital for the first half of the year reached 414.3 billion won, a 52.3% increase from the same period last year.
By company, Hana Capital's net profit soared to 104.5 billion won, marking a 599.3% increase year-on-year. Shinhan Capital reported a profit of 94.7 billion won, up 48.1%, while Woori Financial Capital's profit rose 14.9% to 77 billion won. KB Capital also saw an 11.3% increase, reaching 138.1 billion won.
The overall improvement in the performance of these capital firms is attributed to a decrease in bad debt expenses related to real estate PF. The amount set aside for provisions is a preemptive measure by financial companies to account for potential future losses. A reduction in these provisions directly increases net profit.
In response to concerns about a downturn in the real estate PF market and the risk of bridge loan defaults in 2024-2025, capital firms had previously set aside large provisions. At that time, financial authorities guided firms to fully account for expected losses on bridge loans that did not transition to main PF. Consequently, capital firms significantly increased their provisions in anticipation of deteriorating asset quality related to PF.
This year, however, substantial progress has been made in managing risks and resolving concerns over troubled PF projects, leading to a reduction in the burden of provisions.
Indeed, Hana Capital's provision for bad debts in the first half of the year was 61.5 billion won, a 59.1% decrease from the same period last year. Shinhan Capital also saw a reduction to 55.3 billion won, down 35.9%. KB Capital's credit loss provisions and Woori Financial Capital's bad debt expenses decreased by 7.6% and 1.4%, respectively.
A representative from Hana Capital stated, "As delinquencies are resolved, the amount set aside for bad debt provisions also decreases. The risks associated with PF projects, which have been managed as high-risk, have been significantly alleviated, leading to improved asset quality."
A representative from Shinhan Capital explained, "The results reflect the effects of proactive risk management and the resolution of non-performing assets related to real estate."
However, interest income for capital firms has slightly decreased due to the burden of funding costs amid prolonged high interest rates. Hana Capital's interest income fell by 3.7% to 134.9 billion won, while Shinhan Capital and Woori Financial Capital reported decreases of 4.0% and 2.9%, respectively. KB Capital's net interest income also dropped by 9.0% to 209.1 billion won.
According to the financial sector on July 27, the combined net profit of KB, Shinhan, Hana, and Woori Financial Capital for the first half of the year reached 414.3 billion won, a 52.3% increase from the same period last year.
By company, Hana Capital's net profit soared to 104.5 billion won, marking a 599.3% increase year-on-year. Shinhan Capital reported a profit of 94.7 billion won, up 48.1%, while Woori Financial Capital's profit rose 14.9% to 77 billion won. KB Capital also saw an 11.3% increase, reaching 138.1 billion won.
The overall improvement in the performance of these capital firms is attributed to a decrease in bad debt expenses related to real estate PF. The amount set aside for provisions is a preemptive measure by financial companies to account for potential future losses. A reduction in these provisions directly increases net profit.
In response to concerns about a downturn in the real estate PF market and the risk of bridge loan defaults in 2024-2025, capital firms had previously set aside large provisions. At that time, financial authorities guided firms to fully account for expected losses on bridge loans that did not transition to main PF. Consequently, capital firms significantly increased their provisions in anticipation of deteriorating asset quality related to PF.
This year, however, substantial progress has been made in managing risks and resolving concerns over troubled PF projects, leading to a reduction in the burden of provisions.
Indeed, Hana Capital's provision for bad debts in the first half of the year was 61.5 billion won, a 59.1% decrease from the same period last year. Shinhan Capital also saw a reduction to 55.3 billion won, down 35.9%. KB Capital's credit loss provisions and Woori Financial Capital's bad debt expenses decreased by 7.6% and 1.4%, respectively.
A representative from Hana Capital stated, "As delinquencies are resolved, the amount set aside for bad debt provisions also decreases. The risks associated with PF projects, which have been managed as high-risk, have been significantly alleviated, leading to improved asset quality."
A representative from Shinhan Capital explained, "The results reflect the effects of proactive risk management and the resolution of non-performing assets related to real estate."
However, interest income for capital firms has slightly decreased due to the burden of funding costs amid prolonged high interest rates. Hana Capital's interest income fell by 3.7% to 134.9 billion won, while Shinhan Capital and Woori Financial Capital reported decreases of 4.0% and 2.9%, respectively. KB Capital's net interest income also dropped by 9.0% to 209.1 billion won.
* This article has been translated by AI.
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