The Bank of Korea reported that its profits from managing foreign assets approached 17 trillion won last year, marking the highest figure on record. The increase in the won-dollar exchange rate and rising prices of securities contributed to a profit increase of over 4 trillion won compared to the previous year. However, the specific management profit rate was not disclosed, raising concerns about the ability to verify actual investment performance excluding exchange rate effects.
According to data submitted to lawmaker Lee Jong-wook of the ruling People Power Party by the Bank of Korea, the central bank's foreign asset management profit was recorded at 16.9 trillion won last year, an increase of 4.1 trillion won (32%) from the previous year’s 12.8 trillion won, the largest ever.
The foreign asset management profit includes interest, dividends, and gains or losses from the sale of securities from assets managed directly by the Bank or entrusted to external specialists. The total is calculated in won after accounting for management costs.
From 2016 to 2018, the Bank's foreign asset management profits remained around 8 trillion won annually, increasing to 11.8 trillion won in 2019. Profits rose to 13.5 trillion won in 2020 and 13.8 trillion won in 2021, but fell sharply to 3.9 trillion won in 2022. In 2023, profits rebounded to 4.9 trillion won and have continued to rise recently.
According to the Bank's '2025 Annual Report' released in March, the total net profit for the year also increased to 15.3 trillion won, up 7.5 trillion won from the previous year’s 7.8 trillion won, driven by gains in foreign exchange trading, securities trading, and interest income. Notably, foreign exchange trading profits rose by 5.2 trillion won, while securities trading profits increased by 1.2 trillion won compared to the previous year.
There has also been a shift in the management of foreign assets. At the end of last year, the proportion of externally entrusted assets was 25.5%, an increase of 7.5 percentage points from 18.0% in 2016. During the same period, the proportion of directly managed assets decreased from 82.0% to 74.5%.
Last year, the Bank began to include stocks as a new investment target, initiating limited investments. This diversification of direct management strategies complements the entrusted management with overseas asset management firms and the Korea Investment Corporation (KIC).
The Bank also emphasized securing liquidity in response to uncertainties in the foreign exchange market. At the end of last year, the proportion of cash-equivalent assets reached 10.6%, the highest level in the past decade. The Bank's annual report noted that the proportion of cash-equivalent assets rose by 2.6 percentage points from 8.0% in 2024 to 10.6% last year. As of the end of last year, 97.0% of total foreign assets were managed in bonds rated A or higher, maintaining a focus on safety and liquidity over profitability.
However, it remains difficult to ascertain how much the increase in management profits reflects actual improvements in investment performance. The Bank does not disclose specific rates of return or the total size of managed assets, considering the safety of foreign reserves and the stabilizing function of the market.
Lee Jong-wook stated, "It is necessary to distinguish between the effects of the rising exchange rate and actual management performance. The Bank should provide sufficient data necessary for the National Assembly to verify management performance while protecting the confidentiality related to the foreign exchange market."
* This article has been translated by AI.
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