[Click eStock] "IBK, Q1 Earnings Exceed Market Expectations... Benefit of Low Loan Loss Provisions"

[Asia Economy Reporter Jihwan Park] NH Investment & Securities on the 28th stated that the first quarter net profit of IBK was 500 billion KRW, exceeding market expectations, and presented a buy rating with a target price of 8,300 KRW.

Researcher Boram Jo of NH Investment & Securities analyzed, "Core profits such as interest income and fee income did not meet expectations, but operating profit exceeded forecasts due to lower-than-expected loan loss provisions."

The net interest margin declined due to the base interest rate cut, and the non-interest income segment fell significantly short of expectations due to decreased fee income and foreign exchange derivative-related valuation losses.

The strong performance was driven by lower-than-expected loan loss provisions. This included a 25 billion KRW reversal of provisions related to PF loan repayments, a reduction in the amount of provisions for defaulted loans, and seasonal decreases in amortization.

However, it remains uncertain whether the trend of low loan loss provision rates will continue into the second quarter, when the economic downturn caused by the COVID-19 pandemic is expected to intensify.

Researcher Boram Jo predicted, "The scale of reversals/losses from ultra-low interest loans to small business owners is about 80 billion KRW annually and will be reflected starting from the second quarter results."

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