NongHyup Financial, Q1 Net Profit Down 21.7% YoY to 338.7 Billion Won... "Direct Impact of Capital Market Shock"

Bank Net Profit Shrinks 13.7%, Securities Net Profit Drops 81.2%... Impact of Decline in Marketable Securities and Forex/Derivatives Gains

[Asia Economy Reporter Kwon Haeyoung] NH Nonghyup Financial Group's net profit for the first quarter of this year decreased by more than 20% compared to the same period last year. This was due to a reduction in gains and losses from securities, foreign exchange, and derivatives caused by increased volatility in the global financial markets triggered by the novel coronavirus infection (COVID-19).

Nonghyup Financial announced on the 29th that its net profit for the first quarter of this year was 338.7 billion KRW, down 21.7% from 432.7 billion KRW in the same period last year. Considering the agricultural support expenses of 107 billion KRW provided under the Nonghyup Act to support agriculture and rural areas, the net profit was 413.6 billion KRW.

Due to COVID-19, gains and losses from securities, foreign exchange, and derivatives in banks and investment securities decreased by 361.4 billion KRW compared to the same period last year, significantly slowing performance.

Interest income was recorded at 1.9486 trillion KRW, an increase of 6.1 billion KRW compared to one year ago. The net interest margin (NIM) fell by 0.08 percentage points from 1.78% in the same period last year to 1.7% due to the base interest rate cut.

Fee income and credit loss expenses showed improved performance. Fee income increased by 51.2 billion KRW compared to the same period last year, reaching 377.4 billion KRW, influenced by the expansion of non-face-to-face transactions and increased stock trading volume. Credit loss provisions were 82.8 billion KRW, down 18.7% from the same period last year due to the reversal of large bad debt reserves.

Total assets amounted to 450.9 trillion KRW, up 5.6% (23.8 trillion KRW) from the end of last year. The group's won-denominated loans grew by 1.6% to 238.3 trillion KRW compared to the end of last year. By sector, household loans increased by 1.3%, and corporate loans by 2.6%. Nonghyup Bank's won-denominated loans rose by 2.1% (4.5 trillion KRW) to 215.6 trillion KRW compared to the end of last year, with household loans up 1.5% (1.7 trillion KRW) and corporate loans up 5.1% (3.5 trillion KRW), maintaining solid growth.

Profitability indicators showed a return on equity (ROE) of 6.32% and a return on assets (ROA) of 0.31%. Asset soundness indicators such as the ratio of non-performing loans to total loans at 0.63% and the loan loss reserve ratio at 107.95% remained at the same level as the end of last year, continuing a favorable trend.

The core subsidiary, Nonghyup Bank, posted a net profit of 316.2 billion KRW for the first quarter, down 13.7% (50 billion KRW) from the same period last year. Although interest income and fee income slightly increased compared to the same period last year, gains and losses related to securities decreased due to increased stock index volatility.

Among non-bank affiliates, the investment securities division recorded a net profit of 32.2 billion KRW, shrinking by 81.2% (138.9 billion KRW) compared to the same period last year. Additionally, life insurance posted 5.1 billion KRW, non-life insurance 8.9 billion KRW, capital 10.5 billion KRW, asset management 6.1 billion KRW, and savings banks 5.2 billion KRW in net profits.

An official from Nonghyup Financial stated, "Through solid emergency management, we will minimize the short-term management shock caused by the COVID-19 pandemic and strengthen core competencies for recovery resilience to enhance crisis response and sustainable management systems."

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