Q3 Domestic Banks' Net Profit 3.5 Trillion KRW... 7% Decrease YoY

Q3 NIM Hits All-Time Low

[Asia Economy Reporter Kim Hyo-jin] The net income of domestic banks in the third quarter of this year was approximately 3.5 trillion KRW, a decrease of 300 billion KRW (7.1%) compared to the same period last year (3.7 trillion KRW), the Financial Supervisory Service announced on the 12th.

During this period, the return on assets (ROA) of domestic banks was 0.47%, and the return on equity (ROE) was 6.27%, down 0.08 percentage points and 0.83 percentage points respectively compared to the same period last year.

Interest income increased by 100 billion KRW (1.3%) to 10.4 trillion KRW compared to 10.2 trillion KRW in the same period last year.

This was the result of a 9.0% increase in operating assets such as loan receivables, despite a 0.15 percentage point decline in net interest margin (NIM). The NIM in the third quarter recorded an all-time low of 1.40%.

Non-interest income rose by 200 billion KRW (11.2%) to 1.8 trillion KRW compared to 1.6 trillion KRW in the same period last year.

While fees, securities, and foreign exchange derivatives-related income slightly increased, trust-related income decreased by 100 billion KRW due to business contraction following the derivative-linked fund (DLF) loss incident.

Selling and administrative expenses of domestic banks in the third quarter increased by 100 billion KRW (1.3%) to 5.7 trillion KRW compared to 5.6 trillion KRW in the same period last year.

Loan loss provisions were about 1.5 trillion KRW, similar to the same period last year. Although provisions were increased reflecting the economic situation caused by the novel coronavirus infection (COVID-19), this was offset by a base effect from large-scale provisions made by some banks in the third quarter of last year.

Non-operating losses in the third quarter turned to a loss of 300 billion KRW, a decrease of 600 billion KRW compared to a gain of 300 billion KRW in the same period last year.

Corporate tax expenses were about 1.3 trillion KRW, similar to the same period last year.

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