Last Year, Financial Holding Companies' Net Profit Surpassed 21 Trillion Won... Over 40% Increase Compared to Previous Year

Profit increase and decrease by subsidiary region compared to the previous year as of 2021. Photo by Financial Supervisory Service

[Asia Economy Reporter Song Seung-seop] Last year, the net income of domestic financial holding companies increased by more than 40%, surpassing 21 trillion won. Financial authorities plan to strengthen loss absorption capacity in preparation for the end of COVID-19 policy support and various uncertainties.

According to the financial sector on the 6th, the consolidated net income of financial holding companies last year was 21.189 trillion won. This is an increase of 6.0706 trillion won (40.2%) from 15.1184 trillion won the previous year. Banks recorded the largest net income at 2.4379 trillion won (23.7%). The financial investment sector followed with 1.7118 trillion won (51.7%), insurance with 667.6 billion won (49.1%), and credit finance companies including others with 1.1191 trillion won (46.1%).

By subsidiary sector, banks accounted for the highest profit share at 53.0%, but this was down 4.1 percentage points from a year earlier. Meanwhile, financial investment rose 2.5 percentage points to 20.9%, and the shares of insurance and credit finance companies also increased by 0.9 and 1.3 percentage points, respectively.

Total assets grew by 257 trillion won (8.7%) to 3,203 trillion won compared to 2,946 trillion won at the end of the previous year. By sector, banks increased by 206.02 trillion won (9.5%), financial investment by 10.3 trillion won (3.3%), insurance by 4.5 trillion won (1.7%), and credit finance companies including savings banks by 30.1 trillion won (17.4%). Banks held the largest share at 74.5%, up 0.5 percentage points from the previous year.

The total capital, core capital, and common equity tier 1 capital ratios of bank holding companies were 15.59%, 14.26%, and 12.73%, respectively. Despite an increase in risk-weighted assets, capital ratios improved by 0.95, 1.08, and 0.80 percentage points compared to the end of the previous year due to retained earnings and issuance of capital securities. The ratio of non-performing loans classified as fixed or below fell by 0.11 percentage points to 0.47%. The loan loss provision coverage ratio increased by 24.5 percentage points to 155.9%.

The debt ratio of financial holding companies decreased by 0.96 percentage points to 27.91% compared to 28.87% at the end of the previous year.

Meanwhile, there are a total of 10 financial holding companies with 290 subsidiaries and affiliated companies. The number of affiliated companies increased by 26 from 264 at the end of the previous year due to the inclusion of healthcare companies by KB and Shinhan Financial Groups.

The Financial Supervisory Service stated that it will encourage proactive measures against potential risks such as increased macroeconomic uncertainty, deteriorating debt repayment ability amid rising interest rates, expanded asset price volatility, and the end of COVID-19 policy support. It also plans to strengthen management of asset soundness and loss absorption capacity at the holding group level in preparation for the end of COVID-19 policy support. Additionally, risk management and internal controls related to high-risk investments and sales of high-risk products will be reinforced to prepare for increased financial market volatility.

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