Domestic Banks' H1 Net Profit Hits 10.8 Trillion Won... Interest Income Rises and Korea Development Bank Effect

Increase of Approximately 4 Trillion Won Compared to the First Half of Last Year

[Asia Economy Reporter Park Sun-mi] Due to an increase in interest income from expanded loan assets and a surge in non-recurring gains at Korea Development Bank, the net income of 19 domestic banks in the first half of this year significantly increased.

According to the Financial Supervisory Service on the 11th, the net income of 18 domestic banks excluding Korea Development Bank in the first half of this year recorded 8.6 trillion won, an increase of 2.1 trillion won compared to 6.5 trillion won in the first half of last year. Interest income expanded by 1.7 trillion won due to the increase in loan assets, and credit loss expenses decreased by 1.3 trillion won year-on-year due to sustained sound asset quality and the cumulative increase in loan loss provisions last year.

The net income of domestic banks including Korea Development Bank was 10.8 trillion won. This is about 4 trillion won higher than the first half of last year due to a surge in non-recurring gains such as conversion gains from the exercise of convertible bond (CB) conversion rights of HMM (formerly Hyundai Merchant Marine) by Korea Development Bank, valuation gains of Daewoo Shipbuilding, and dividend income from Korea Electric Power Corporation.

The return on assets (ROA, 0.83%) and return on equity (ROE, 11.11%) of domestic banks in the first half of this year also rose by 0.34 percentage points and 4.61 percentage points, respectively. Based on 18 banks excluding Korea Development Bank, ROA was 0.63% and ROE was 9.20%, rising by 0.14 percentage points and 2.20 percentage points, respectively.

Interest income of domestic banks in the first half was 22.1 trillion won, an increase of 1.7 trillion won compared to 20.3 trillion won in the same period last year. This was influenced by the recovery of the net interest margin (NIM) to 1.44% in the first half, the same level as the previous year (1.44%), and a 7.6% increase in interest-earning assets such as loan receivables from 2,446 trillion won in the first half of last year to 2,654 trillion won in the first half of this year.

During the same period, non-interest income of domestic banks was 5 trillion won, an increase of 1.3 trillion won compared to 3.7 trillion won in the same period last year. However, based on 18 banks excluding Korea Development Bank, non-interest income was 2.7 trillion won, a decrease of 400 billion won.

Meanwhile, credit loss expenses of domestic banks in the first half were 2 trillion won, down 1.3 trillion won from 3.3 trillion won in the same period last year. This is interpreted as a decrease compared to the previous year due to sustained sound asset quality and the cumulative increase in loan loss provisions last year.

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