The combined net profit of South Korea's four major financial groups—KB, Shinhan, Hana, and Woori—is expected to exceed 5.6 trillion won for the third quarter of this year. While profits from securities affiliates, which boosted second-quarter results, are anticipated to decline, banks are expected to support overall performance through increased interest income from corporate loans.
According to financial information provider FnGuide on October 8, the consensus for the combined net profit of the four major financial groups for the third quarter is estimated at 5.6384 trillion won. KB Financial is projected to lead with 1.8396 trillion won, followed by Shinhan Financial at 1.6048 trillion won, Hana Financial at 1.2191 trillion won, and Woori Financial at 9749 billion won.
The combined net profit is expected to decrease compared to the second quarter. This is due to a projected decline in the contribution of securities affiliates' profits, influenced by reduced trading volumes and rising interest rates. Individually, KB Financial and Shinhan Financial are expected to see a decrease in net profit compared to the previous quarter, while Hana Financial may experience a slight increase, and Woori Financial is expected to maintain a similar level.
In the banking sector, the increase in loan assets is expected to support interest income. Amid ongoing household loan regulations, financial groups are focusing on expanding corporate loans. However, rising market interest rates are also increasing funding costs for deposits and bank bonds, which may lead to a slight decline in net interest margin (NIM) compared to the previous quarter. The expansion of loan assets and rising funding costs are thus acting in opposing directions for banks' interest income.
The continuation of growth in the financial investment sector, which drove first-half results, remains a variable. According to the Financial Supervisory Service, the combined net profit of the top 10 financial groups in the first half of the year was 17.6 trillion won, a 13.7% increase from the same period last year. In contrast to the combined results, individual performance in different sectors showed a 72.8% increase in financial investment profits, while bank profits decreased by 7.9%.
Concerns over soundness management have also increased. The ratio of non-performing loans among the 10 financial groups rose from 0.95% at the end of last year to 1.03% at the end of June, an increase of 0.08 percentage points. The reserve ratio for bad debt decreased from 106.8% to 96.5%, a drop of 10.3 percentage points during the same period. The Financial Supervisory Service noted that the increased proportion of market-sensitive sectors, such as financial investment, has heightened the need for loss absorption capacity and soundness management of subsidiaries.
* This article has been translated by AI.
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