'Performance Shock' BNK Financial Group Reports Q1 Net Profit of 137.7 Billion KRW... Down 22% YoY

Core affiliates Busan Bank and Gyeongnam Bank both drop over 20%
Non-bank sectors excluding BNK Capital also sluggish... BNK Asset Management posts 'loss'

Kim Ji-wan, Chairman of BNK Financial Group

[Asia Economy Reporter Kim Min-young] BNK Financial Group announced on the 28th through its earnings report that it achieved a net profit attributable to controlling shareholders of 137.7 billion KRW in the first quarter of this year. This represents a 22.28% decline compared to the same period last year (177.1 billion KRW). The drop was larger than the market expectation of an 18.4% decrease. Both the banking and non-banking sectors posted sluggish results.

Nevertheless, BNK Financial stated, "Excluding last year's one-off factors (such as reversal of provisions), the performance was favorable despite the impact of the novel coronavirus disease (COVID-19)."

By segment, interest income decreased by 21.4 billion KRW (3.8%) year-on-year to 536.5 billion KRW, while fee income increased by 14.7 billion KRW (27.3%) year-on-year to 68.6 billion KRW, driven by strong real estate project financing (PF) fees from non-bank subsidiaries.

Loan loss provisions decreased by 10.3% year-on-year to 83.2 billion KRW, reflecting stable provision management due to a reduction in defaults and bankruptcies in the Yeongnam region.

The core banking subsidiaries showed clear weakness. Both Busan Bank and Gyeongnam Bank saw net profits fall by more than 20%. Busan Bank earned 87.4 billion KRW, down 22.75% from 113.1 billion KRW in the same period last year. Gyeongnam Bank also recorded a net profit of 47.4 billion KRW, a 24.08% decrease from 62.4 billion KRW last year.

Net profits of non-bank affiliates were mixed. In the first quarter, BNK Capital earned 19.2 billion KRW, growing 24.7% from 15.4 billion KRW in the same period last year, whereas BNK Investment & Securities and BNK Savings Bank earned 6.8 billion KRW and 4.2 billion KRW respectively, both down from the previous year. BNK Asset Management recorded a net loss of 4.0 billion KRW, turning to a deficit.

Asset quality remains sound. The Basel Committee on Banking Supervision (BIS) total capital ratio, a capital adequacy indicator, rose by 0.03 percentage points from the end of last year to 12.98%, and the common equity tier 1 capital ratio stood at 9.53%, maintaining a stable level.

A BNK Financial official said, “We expect the common equity capital ratio to gradually increase when the group’s internal ratings-based approach approval currently underway and the Basel III final regulations to be implemented from the second quarter are applied. This year, we will do our best to fulfill our role as a regionally based financial institution to revive the contracted local economy.”

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