Despite COVID-19, Over 20% Strong Performance... The Secret of SC Jeil Bank

[Asia Economy Reporter Kangwook Cho] SC First Bank posted strong earnings with over 20% growth despite the impact of the novel coronavirus disease (COVID-19). The key factors were a sharp increase in wealth management (WM) fee income and corporate finance foreign exchange trading income.

According to the financial sector on the 15th, SC First Bank recorded a consolidated net profit of 182 billion KRW in the first half of this year. This is a strong performance, up 31.7 billion KRW (21.1%) from 150.3 billion KRW in the same period last year. Operating profit rose by 37.8 billion KRW (19.0%) to 236.5 billion KRW from 198.7 billion KRW in the first half of last year.

In particular, non-interest income led the overall performance, increasing by 25.69% to 210.4 billion KRW from 167.4 billion KRW last year. SC First Bank explained that the expansion of financial market volatility contributed to the surge in non-interest income through increased wealth management (WM) fee income and corporate finance foreign exchange trading income.

On the other hand, interest income barely increased by 0.17% to 473.5 billion KRW due to worsening market conditions such as the COVID-19 pandemic and the Bank of Korea’s base rate cuts. The net interest margin (NIM) also fell by 0.19 percentage points to 1.25%.

Return on assets (ROA) and return on equity (ROE) rose by 0.03 percentage points and 1.37 percentage points, respectively, to 0.48% and 8.02%, higher than the same period last year. The ratio of non-performing loans and delinquency rate improved by 0.22 percentage points and 0.11 percentage points to 0.34% and 0.15%, respectively, indicating continuous enhancement of asset portfolio soundness.

However, the loan loss provision coverage ratio increased by 28.72 percentage points to 187.72% compared to the same period last year. Accordingly, the loan loss provision expense for the first half was 43.4 billion KRW, a 74% increase from 24.9 billion KRW in the same period last year. SC First Bank explained this as a proactive measure against risks expanded by the COVID-19 impact. It is interpreted that if the loan loss provisions had not increased, the overall earnings growth would have been even greater.

Total assets reached 81.54 trillion KRW, up 12.6 trillion KRW (18.3%) from 68.94 trillion KRW in the same period last year. This was due to increases in loan assets, investment assets, and derivative assets. As of the end of June, the Bank for International Settlements (BIS) capital adequacy ratio and Tier 1 capital ratio stood at 15.19% and 13.37%, respectively, continuously exceeding regulatory requirements and maintaining capital soundness.

SC First Bank plans to leverage its advantage as a foreign bank in the retail finance sector by enhancing competitiveness through a global asset management strategy and innovative product services suited for the digital era. It is also strengthening its wealth management (WM) business in connection with its parent company, Standard Chartered (SC) Group.

In the corporate finance sector, SC First Bank utilizes SC Group’s global network spanning 59 markets worldwide to explore overseas investment and trade opportunities and hosts the 'Global Research Briefing (GRB)' to introduce economic outlooks and market trends in major regions around the world.

Park Jong-bok, CEO of SC First Bank, said, "Rather than placing significance on short-term performance improvements in specific sectors due to market changes, strengthening the bank’s overall business capabilities and securing a long-term profit base are important tasks. As the business environment is expected to become more challenging and uncertain in the second half of the year, we plan to enhance resilience to risks and find ways to maximize our strengths."

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