Reviving Household Loans... Banks Smooth Sailing in Q2

Top 4 Landlords Achieve Record-Breaking Q1 Consolidated Earnings of 4.6399 Trillion Won
Interest Income Drives Strong Performance
Household Loans Begin Rising This Month
Q2 Expected to Increase Compared to Last Year

[Asia Economy Reporter Song Hwajeong] As banks recorded record-breaking earnings in the first quarter of this year, signs of a recovery in household loans have turned on a green light for second-quarter earnings as well.

According to financial information firm FnGuide on the 25th, the net profits of the four major financial holding companies?KB Financial Group, Shinhan Financial Group, Hana Financial Group, and Woori Financial Group?are all expected to increase year-on-year in the second quarter of this year, indicating continued strong performance.

The consensus forecast for KB Financial's second-quarter net profit is 1.2857 trillion KRW, expected to rise 6.76% compared to the same period last year. Shinhan Financial Group is expected to increase by 2.81% to 1.2254 trillion KRW, while the second-quarter net profit consensus for Hana Financial Group and Woori Financial Group is 980.6 billion KRW and 796.1 billion KRW, respectively, representing increases of 6.92% and 5.78% year-on-year.

Although slightly lower than the record-high first quarter of this year, a favorable growth trend in earnings is expected to continue in the second quarter. The combined consolidated net profit of the four major financial holding companies in the first quarter of this year was 4.6399 trillion KRW, up 16.9% year-on-year. The first quarter, traditionally a low season for loans, surpassed 4 trillion KRW in net profit for the first time. KB Financial took first place with a net profit of 1.4531 trillion KRW, achieving the highest quarterly figure with a 14.4% increase from the first quarter of last year. Shinhan Financial also recorded 1.4004 trillion KRW, up 17.5% year-on-year, marking its highest quarterly net profit. Hana Financial posted 902.2 billion KRW, an 8.0% increase, and Woori Financial achieved its highest quarterly net profit of 884.2 billion KRW.

Interest income from banks drove the strong earnings. KB Financial's first-quarter interest income was 2.648 trillion KRW, up 18.6% year-on-year. The other banks?Shinhan (2.4876 trillion KRW), Hana (2.0203 trillion KRW), and Woori (1.9877 trillion KRW)?also recorded double-digit growth rates in interest income.

Kim Eungap, a researcher at IBK Investment & Securities, said, "The main driver of earnings improvement for all four major financial holding companies is the increase in interest income due to the rise in net interest margin (NIM). With provisioning costs stabilizing downward, the increase in interest income from the rising NIM is expected to continue, so second-quarter earnings should also be favorable."

Household loans, which had been declining throughout the first quarter, are expected to turn to an upward trend starting this month, which is anticipated to bolster second-quarter earnings. According to the financial sector, as of the 21st, the outstanding household loans of the five major banks?KB, Shinhan, Hana, Woori, and NH Nonghyup?stood at 703.4484 trillion KRW, an increase of 254.7 billion KRW compared to the end of March. With about six business days remaining until the end of this month, it is highly likely that household loans will close the month with a month-on-month increase. The five major banks' household loans decreased by 1.3634 trillion KRW in January, 1.7522 trillion KRW in February, and 2.7436 trillion KRW in March, marking three consecutive months of decline. Kim Hyunki, a researcher at Hi Investment & Securities, predicted, "Since the phase is expected to see a relaxation of household loan regulations, household loan growth will resume."

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