'Top Competition' KB and Shinhan Both Achieve Record-High First Half Performance

KB Maintains Top Spot with 2.7566 Trillion Won... Shinhan Closely Chasing

[Asia Economy Reporters Yu Je-hoon and Song Seung-seop] KB Financial Group and Shinhan Financial Group, competing for the title of 'leading bank,' both recorded their highest-ever earnings in the first half of this year. While securities affiliates struggled due to rising interest rates, banking affiliates performed well based on loan expansion, and insurance and card affiliates also held their ground.

According to the financial sector on the 22nd, KB Financial and Shinhan Financial posted net profits of 2.7566 trillion KRW and 2.7208 trillion KRW, respectively, in the first half of this year. This represents an increase of 11.4% (282.3 billion KRW) and 11.3% (277 billion KRW) compared to the same period last year. As a result, both groups achieved record half-year earnings.

The strong performance was driven by interest income. KB Financial and Shinhan Financial's net interest income in the first half rose by 18.7% and 17.3% to 5.4418 trillion KRW and 5.1317 trillion KRW, respectively. This was due to the expansion of net interest margin (NIM) following the rise in interest rates. For KB Financial, the group's overall NIM in Q2 increased by 5 basis points (1bp=0.01%) from the previous quarter to 1.96%, while Shinhan Financial's rose by 9 basis points to 1.98%.

Non-interest income was relatively subdued. KB Financial's non-interest income stood at 1.9693 trillion KRW, down 25.1% compared to the same period last year. Shinhan Financial also saw a 7.7% decrease to 1.8415 trillion KRW, as gains in fee income were offset by losses related to securities due to rising market interest rates.

By affiliate, the clear driver of earnings was the banking sector. KB Kookmin Bank's net profit in the first half increased by 21.4% to 1.7264 trillion KRW, driven by loan growth and increased interest income. Shinhan Bank also posted a 22.9% increase to 1.683 trillion KRW. Each accounted for more than half of their group's total net profit.

The insurance and card sectors performed well. KB Insurance's net profit surged 207.5% year-on-year to 439.4 billion KRW. KB Kookmin Card's net profit decreased by 2.8% to 245.7 billion KRW, while Shinhan Card's increased by 12.4% to 412.7 billion KRW (including gains from real estate sales), which was a solid performance considering the relatively unfavorable funding and business conditions. However, among insurance affiliates, life insurance companies did not avoid a downturn. Prudential Life's net profit fell 18% year-on-year to 157.7 billion KRW, and Shinhan Life's dropped 10% to 277.5 billion KRW.

On the other hand, securities affiliates showed a clear decline in earnings due to rising interest rates, falling stock indices, and increased financial market volatility. KB Securities and Shinhan Investment Corp. posted net profits of 182 billion KRW and 189.1 billion KRW, respectively, down 51.4% and 41.4% compared to the same period last year.

Meanwhile, both major financial groups simultaneously announced shareholder-friendly policies. KB Financial decided on a quarterly dividend of 500 KRW per share and also resolved to retire treasury shares worth 150 billion KRW for the second time this year. Shinhan Financial also decided on a quarterly dividend of 400 KRW per share in Q1 and plans to determine the Q2 dividend level at the board meeting next month.

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