Savings Banks, Record High H1 Net Profit of 684 Billion Won... "Sound Asset Quality Despite Loan Growth"

Total Loans Reach 69.3 Trillion Won, Up 6.6% QoQ
Delinquency Rate Remains at Last Year's Year-End Level

[Asia Economy Reporter Kim Hyo-jin] Domestic savings banks recorded a record high net income of 684 billion KRW in the first half of this year.

According to the Financial Supervisory Service on the 7th, the net income of 79 savings banks in the first half of this year was 684 billion KRW, an increase of 86.4 billion KRW (14.5%) compared to the same period last year (597.6 billion KRW), which was the highest ever. Although non-interest losses (79.4 billion KRW) and provisions for loan losses (46.1 billion KRW) increased, net income expanded due to a significant increase in interest income (265.1 billion KRW).

Total loans of savings banks in the first half reached 69.3 trillion KRW, a sharp increase of 4.3 trillion KRW (6.6%) compared to the previous quarter (65 trillion KRW). Household loans amounted to 27.8 trillion KRW, increasing by 1.7 trillion KRW (6.5%) mainly in unsecured loans compared to the previous quarter, while corporate loans grew by 2 trillion KRW (5.3%) to 39.2 trillion KRW, mainly in corporate loans.

Total assets of savings banks in the first half were recorded at 82.6 trillion KRW. This is an increase of 5.4 trillion KRW (7.0%) compared to the previous quarter (77.2 trillion KRW). Equity capital rose by 566.8 billion KRW (6.3%) to 9.6 trillion KRW from 9 trillion KRW in the previous quarter. This was the result of retained earnings increasing by 684 billion KRW due to net income.

Financial Supervisory Service

Asset quality was also sound. At the end of June, the total loan delinquency rate was 3.7%, the same as at the end of last year. Compared to the end of June last year (4.1%), it decreased by 0.04 percentage points. The delinquency rate for corporate loans rose by 0.01 percentage points to 4.0%, while the delinquency rate for household loans decreased by 0.02 percentage points to 3.4%.

The non-performing loan ratio at the end of June was 4.5%, down 0.2 percentage points from 4.7% at the end of last year. The BIS (Bank for International Settlements) capital adequacy ratio at the end of June was 14.86%, improving by 0.03 percentage points from 14.83% at the end of last year. This is a level higher than the regulatory ratio.

The regulatory ratio is 8% for assets of 1 trillion KRW or more, and 7% for assets under 1 trillion KRW. The increase in BIS capital due to net income growth (800 billion KRW / 8.0%↑) slightly exceeded the increase in risk-weighted assets (5 trillion KRW / 7.8%↑).

An official from the Financial Supervisory Service evaluated the operating conditions of savings banks as generally sound but said, "Since the possibility of potential risks materializing, such as the resurgence of COVID-19, is emerging, we plan to encourage preemptive enhancement of loss absorption capacity through additional provisions for loan losses."

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