'Hana Financial Group's Earnings Surprise Despite COVID-19: H1 Net Profit of 1.3446 Trillion KRW, Up 11.6% YoY'

The Largest Performance Since 2012

Hana Financial Group Myeongdong Building, Jung-gu, Seoul

[Asia Economy Reporter Kim Min-young] Hana Financial Group posted its highest-ever first-half performance despite the novel coronavirus disease (COVID-19).

Hana Financial announced on the 23rd that it achieved a cumulative consolidated net profit of 1.3446 trillion KRW for the first half of this year, including 687.6 billion KRW in the second quarter. This represents an increase of 140.1 billion KRW (11.6%) compared to the same period last year. A company official stated, "Despite proactive additional provisioning, we achieved the highest performance since 2012."

Non-bank and Global Sectors Excel

The non-bank and global sectors showed remarkable progress. The non-bank sector earned 407.9 billion KRW in the first half, an increase of 106.9 billion KRW compared to the same period last year. Major non-bank affiliates such as Hana Financial Investment posted 172.5 billion KRW (an increase of 19.7 billion KRW year-on-year), Hana Capital 84.1 billion KRW (an increase of 37.1 billion KRW), and Hana Card 65.3 billion KRW (an increase of 31.6 billion KRW), contributing to the group's growth momentum. The proportion of non-bank profits within the group rose by 5.3 percentage points to 30.3% in the first half compared to the same period last year.

The global sector also generated 169.5 billion KRW in profits in the first half, earning 66.7 billion KRW more than the same period last year. Its share within the group was 12.6%.

The bank, which focused on financial support for ordinary citizens and small business owners through COVID-19 loans in the first half, also posted strong results. Hana Bank recorded a cumulative consolidated net profit of 1.062 trillion KRW for the first half, including 507.4 billion KRW in the second quarter. This is a 2.7% (28.2 billion KRW) increase compared to the same period last year, attributed to improved securities management performance and efforts to reduce selling and administrative expenses, according to a company official.

Hana Financial also made thorough efforts to strengthen soundness measures in preparation for COVID-19. To secure sufficient loss absorption capacity related to COVID-19, it set aside 432.2 billion KRW in provisions and other transfers during the second quarter, an increase of 339.1 billion KRW compared to the previous quarter. As of the first half, the amount of provisions and other transfers increased by 112.5% (278.1 billion KRW) year-on-year to 525.2 billion KRW, enhancing the group's overall loss absorption capacity.

The group's core earnings, combining interest income (2.8613 trillion KRW) and fee income (1.0809 trillion KRW), totaled 3.9422 trillion KRW. The group's net interest margin (NIM) remained steady at 1.62%, the same as the previous quarter.

Cost reduction efforts were also made. Selling and administrative expenses for the first half decreased by 9.7% (190.3 billion KRW) year-on-year to 1.7763 trillion KRW. The operating expense ratio also improved significantly, falling by 6.8 percentage points year-on-year to 43.1%, demonstrating enhanced cost efficiency.

Despite increased domestic and international uncertainties, the group's asset soundness indicators remained stable. The group's NPL coverage ratio rose by 20.4 percentage points year-on-year to 126.8%. The group's delinquency rate at the end of the second quarter was 0.31%, unchanged from the previous quarter, and the ratio of non-performing loans to total loans decreased by 0.02 percentage points from the previous quarter to 0.45%, maintaining sound asset quality.

Key management indicators showed a return on equity (ROE) of 9.44%, up 0.06 percentage points from the previous quarter, and a return on assets (ROA) of 0.63%, unchanged from the previous quarter.

The estimated Basel III (BIS) capital adequacy ratio increased by 0.28 percentage points from the previous quarter to 14.08%, and the estimated common equity tier 1 ratio rose by 0.14 percentage points to 12.04%.

As of the end of the second quarter, the group's total assets, including trust assets of 129 trillion KRW, amounted to 571 trillion KRW.

On the same day, Hana Financial's board of directors resolved to pay an interim dividend of 500 KRW per share. Despite regulatory authorities' recommendations for restraint, Hana Financial cited sufficient loss absorption capacity, no impairment of the bank's funding function, and responsibility and commitment to shareholders as reasons for proceeding with the interim dividend.

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