'Hana Financial Group's "Low Cost, High Efficiency" Achieves 657 Billion KRW Net Profit in Q1, Up 20.3% YoY'

Despite Economic Impact from COVID-19
Banks and Non-Banks Both Show Strong Performance

[Asia Economy Reporter Kim Min-young] Hana Financial Group posted solid results in the first quarter of this year, driven by steady growth in both its banking and non-banking sectors.

Hana Financial announced on the 24th that it recorded a consolidated net profit of 657 billion KRW in the first quarter, an increase of 20.3% (111 billion KRW) compared to the same period last year.

This achievement came despite external challenges such as the deepening domestic and international uncertainties due to the spread of COVID-19 and the base interest rate cuts. It is analyzed that this was supported by ongoing internal efforts to improve cost efficiency and strengthen risk management, as well as contributions from the non-banking and global sectors.

The group’s core earnings, combining interest income (1.428 trillion KRW) and fee income (532.6 billion KRW), reached 1.9606 trillion KRW, up 0.6% (12 billion KRW) from the same period last year.

Although the bank and card net interest margins (NIM) declined due to the base rate cuts and reduced credit card payment income caused by the COVID-19 impact, loan assets grew at an appropriate level thanks to proactive responses to domestic companies’ preemptive funding demands and sustained real demand growth in household and small business loans. This was also supported by increased interest income in global sectors such as China and Indonesia.

In the first quarter, selling and administrative expenses decreased by 12.1% (127.2 billion KRW) year-on-year to 927.9 billion KRW, due to the base effect of approximately 126 billion KRW in special retirement costs recorded in the first quarter of last year and ongoing routine cost-cutting efforts. Cost efficiency improved significantly.

Asset quality indicators were also favorable. The first quarter’s provision for loan losses and other transfers amounted to 92.9 billion KRW, down 43.6% (71.8 billion KRW) from the same period last year, and the group’s loan loss cost ratio for the first quarter fell by 12 basis points (1 bp = 0.01 percentage points) year-on-year to 0.13%, reflecting strengthened risk management efforts.

Profitability also improved. Return on equity (ROE) rose by 1.04 percentage points year-on-year to 9.38%, and return on assets (ROA) increased by 0.05 percentage points year-on-year to 0.63%.

The group’s estimated Basel III (BIS) ratio stood at 13.80%, down 15 basis points from the end of the previous quarter. The estimated common equity tier 1 (CET1) ratio decreased by 7 basis points from the previous quarter-end to 11.89%. Hana Financial explained this was due to the sharp rise in the KRW-USD exchange rate.

Hana Bank, an affiliate, posted a consolidated net profit of 554.6 billion KRW in the first quarter. Despite unfavorable domestic and international economic conditions and increased translation losses related to non-monetary assets due to the weak Korean won, stable management of selling and administrative expenses and loan loss costs helped achieve a 15.6% (74.7 billion KRW) growth compared to the same period last year.

The non-banking sector also performed well. Hana Financial Investment recorded a consolidated net profit of 46.7 billion KRW in the first quarter, down 25.2% (15.8 billion KRW) year-on-year, due to decreased underwriting and advisory fee income amid global real economy contraction and heightened financial market volatility, as well as a decline in the sales and trading division’s performance.

Hana Card posted a net profit of 30.3 billion KRW, up 66.1% (12.1 billion KRW) from the same period last year. Hana Capital earned 44.2 billion KRW, Hana Life Insurance 19 billion KRW, and Hana Asset Trust 19.6 billion KRW.

This content was produced with the assistance of AI translation services.