The top five financial groups in South Korea reported a record net profit of over 13 trillion won in the first half of the year, driven by a booming stock market that significantly boosted non-interest income from their securities affiliates. However, the competitiveness of non-bank affiliates emerged as a key factor in determining growth rates, leading to mixed results among the holding companies.
According to the financial sector on July 26, the combined net profit of KB, Shinhan, Hana, Woori, and NH Financial in the first half of the year was 13.1183 trillion won, a 9.7% increase from the same period last year (11.9541 trillion won), marking the highest figure on record for a half-year period.
By individual holding company, KB Financial led with a net profit of 3.8846 trillion won (+13.1%). It was followed by Shinhan Financial with 3.4427 trillion won (+13.3%), Hana Financial with 2.4029 trillion won (+4.4%), NH Financial with 1.7791 trillion won (+9.2%), and Woori Financial with 1.6090 trillion won (+3.7%). All but Woori Financial set new half-year records.
A notable change in this year's first-half results was the increased significance of the non-bank sector. The combined non-interest income of the five financial groups reached a record 10.7776 trillion won, a 27.6% increase compared to the previous year. The surge in commission income from the capital markets during the stock market boom was a major driver of overall performance.
The fortunes of the holding companies varied based on the performance of their non-bank affiliates. The results from the securities sector increasingly influenced the overall profit growth of the financial groups, with Hana and Woori Financial, which have relatively smaller securities affiliates, showing less improvement compared to KB and Shinhan Financial.
KB Financial, which recorded the highest net profit in the first half, saw the contribution of its non-bank affiliates rise to 44%. KB Securities reported a net profit of 796.3 billion won, accounting for 21% of the group's total net profit.
Shinhan Financial also benefited from Shinhan Investment Corp., which posted a net profit of 577.7 billion won, a 123% increase from the previous year. The contribution of the non-bank sector to Shinhan's profits rose to about 35%. NH Financial also saw its non-bank contribution increase to 39.7%, with NH Investment & Securities reporting a net profit of 965.2 billion won in the first half, allowing NH Financial to maintain its position as the fourth-largest financial group by net profit, surpassing Woori Financial.
In contrast, Hana Financial and Woori Financial struggled to overcome the size disparity of their non-bank affiliates, resulting in relatively modest growth. Hana Securities reported a net profit of 273.1 billion won, a 155.7% increase, but its absolute size remained small compared to the leading groups. Woori Investment & Securities also saw a 47% increase in net profit, but it only reached 24.7 billion won.
Analysts in the financial sector noted that the performance of non-bank affiliates has become increasingly crucial in determining the growth rates and profitability of the holding companies.
A financial sector official stated, "Amid household loan regulations, the roles of securities and asset management non-bank affiliates are becoming more significant in group performance. The competitiveness of the capital markets will continue to be a key factor influencing the profitability of financial holding companies in the second half of the year."
* This article has been translated by AI.
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