The performance of the three major regional financial holding companies in the first half of 2026 was mixed. JB Financial achieved its highest net profit ever, while BNK Financial and iM Financial saw declines. The deterioration in profitability, coupled with stricter management of household loans and the burden of a slowing regional economy, has raised concerns about asset soundness.
According to the financial sector on July 28, the combined net profit of BNK, JB, and iM Financial for the first half of the year was 1.0931 trillion won, a 5.4% decrease from 1.1555 trillion won during the same period last year. This contrasts sharply with the four major financial holding companies, which reported a record net profit of 11.3392 trillion won during the same timeframe.
Among the holding companies, only JB Financial reported an increase in net profit. Its net profit for the first half of the year rose to 385.7 billion won, a 4.1% increase compared to the previous year. In the second quarter, net profit also increased by 5.7% to 219.6 billion won, setting a new quarterly record. The profits of Jeonbuk Bank and Gwangju Bank increased compared to the first quarter, and JB Woori Capital contributed over 100 billion won to the overall performance.
In contrast, iM Financial's net profit for the first half of the year fell to 295.6 billion won, a 4.4% decrease from last year. BNK Financial's net profit was 411.8 billion won, down 13.5% from the same period last year. This decline was influenced by the absence of one-time gains from real estate fund liquidations recorded last year and the occurrence of settlement losses this year.
Industry experts cite the poor performance of regional banks, which make up the largest share, and a business structure heavily reliant on capital and insurance as reasons for the downturn.
Indeed, BNK Financial's banking sector net profit decreased by 13.2% to 356.2 billion won. The net profits of Busan Bank and Gyeongnam Bank fell by 20.1% and 2.2%, respectively, to 201.2 billion won and 155 billion won. iM Bank also saw a 4.2% decrease in net profit to 245.7 billion won.
The issue is compounded by rising delinquency rates amid declining profitability. JB Financial's second-quarter delinquency rate rose to 1.64%, an increase of 0.26 percentage points from the end of last year. BNK Financial's rate also increased to 1.34%, up 0.20 percentage points during the same period. Although iM Financial's delinquency rate slightly decreased to 1.38%, it remains above 1%.
There is a noticeable increase in delinquencies in both household and corporate loans. Jeonbuk Bank's second-quarter household loan delinquency rate rose to 1.70%, up 0.21 percentage points from the end of last year, while the corporate loan delinquency rate climbed to 1.80%. Gwangju Bank's household loan delinquency rate surpassed 1% at 1.02%, and its corporate loan delinquency rate increased to 1.31%. iM Bank saw a decrease in household loan delinquencies, but its corporate loan delinquency rate (1.18%) has risen for four consecutive quarters.
The financial sector anticipates that the performance of regional financial holding companies will not improve significantly in the short term. The government's tightening of household loan management has limited business expansion, and the recovery of the regional economy is lagging.
A financial sector official stated, "Regional financial holding companies continue to face soundness pressures due to the slowdown in the regional economy and the credit structure centered on small and medium-sized enterprises. If the trend of rising interest rates continues, both profitability and asset soundness may come under pressure."
* This article has been translated by AI.
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