Nine-month net profit hits 17.1 trillion won

Already 95% of last year's full-year earnings

Interest income 33.9 trillion won; non-interest income 11.3 trillion won

Headquarters of the four major commercial banks. [Provided by each company]
Headquarters of the four major commercial banks. [Provided by each company]

The four major financial holding groups — KB Financial Group, Shinhan, Hana and Woori Financial Group — are increasingly likely to post combined annual net profit exceeding 20 trillion won ($15 billion) for the first time. Their combined net profit through the third quarter has already surpassed 17 trillion won, reaching 95 percent of last year's full-year earnings. Steady interest income and a surge in non-interest income driven by a buoyant stock market in the first half both contributed to the record pace.

According to the financial industry Friday, the four groups' combined net profit for the period through the third quarter totaled 17.1 trillion won, up 8.2 percent from 15.81 trillion won in the same period last year and the highest ever for a nine-month period.

The four groups' combined annual net profit last year stood at 17.96 trillion won. This year, they reached 95.2 percent of that figure in just nine months, leaving a gap of only 856.9 billion won. Industry observers widely expect that once fourth-quarter results are added, the combined annual net profit of the four groups will surpass 20 trillion won for the first time.

Among the four groups, KB Financial Group led with 5.79 trillion won in nine-month net profit, up 13.1 percent from a year earlier. Shinhan Financial also crossed the 5 trillion won mark for the first time on a nine-month basis, posting 5.03 trillion won, a 12.7 percent increase. Hana Financial recorded 3.62 trillion won, up 5.6 percent. Woori Financial Group's net profit fell 4.9 percent to 2.66 trillion won, though the decline reflected a high base from a one-time gain tied to an insurance company acquisition last year.

Interest income remained the primary driver of earnings. The four groups' combined interest income through the third quarter reached 33.85 trillion won. Even as financial regulators continued to manage household lending, the groups expanded their loan assets — particularly to large corporations and small and medium-sized enterprises — offsetting downward pressure on net interest margins through asset growth.

ATM machines from major commercial banks clustered in central Seoul. [Herald DB]
ATM machines from major commercial banks clustered in central Seoul. [Herald DB]

Non-interest income also made a larger contribution. The four groups' combined non-interest income through the third quarter came to 11.3 trillion won. Securities brokerage revenue rose on the back of a stock market rally and higher trading volumes in the first half, while fee income from wealth management, investment banking, trust services and financial product sales also increased.

KB Financial Group in particular posted cumulative non-interest income of 4.76 trillion won, with net fee income up 38.5 percent from a year earlier. KB Securities' cumulative net profit also climbed into the 1 trillion won range. Shinhan Financial contributed 3.43 trillion won in non-interest income, adding further momentum to its earnings expansion.

In the third quarter alone, however, non-interest income growth slowed compared with the first half. Wider market volatility and lower trading volumes weighed on securities custody fees, while rising market interest rates hurt gains on securities and derivatives. For the full year, key variables that could affect whether the four groups clear the 20 trillion won threshold include fourth-quarter loan-loss provisions, voluntary retirement costs, and the direction of market interest rates and the stock market.

Shareholder returns among the four groups are also expanding. KB Financial Group approved a third-quarter cash dividend of 1,167 won per share, while Shinhan Financial announced a dividend of 740 won per share along with a 450 billion won share buyback. Hana Financial decided on a 250 billion won share buyback and cancellation as well as a quarterly dividend of 1,165 won per share, and Woori Financial Group set a dividend of 220 won per share.


rim@heraldcorp.com