Top 4 Financial Holding Companies Record 9 Trillion Won Net Profit in H1 Due to Increased Interest Income

[Asia Economy Reporter Song Hwajeong] The four major financial holding companies recorded strong performance in the first half of this year as interest income increased due to rising interest rates. KB Financial Group, Shinhan Financial Group, and Woori Financial Group posted their highest half-year earnings to date.

According to the Financial Supervisory Service's electronic disclosure system on the 22nd, the combined net profit of the four major financial holding companies in the first half of this year was 8.9662 trillion KRW, an increase of 10.82% compared to the same period last year.

Interest Income Drives Strong Performance

KB Financial Group and Shinhan Financial Group recorded net profits of 2.7566 trillion KRW and 2.7208 trillion KRW respectively in the first half, up 11.4% and 11.3% year-on-year. Woori Financial Group posted 1.7614 trillion KRW, an increase of 23.47%, while Hana Financial Group recorded 1.7274 trillion KRW, a decrease of 1.45%.

The rise in interest rates led to increased interest income, driving strong performance. 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. Woori Financial Group recorded 4.103 trillion KRW, up 23.47%. Hana Financial Group posted 4.1906 trillion KRW, an 18% increase.

The net interest margin (NIM) continued to rise. 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 NIM rose 9bp to 1.98%. Woori Financial Group's NIM increased by 10bp to 1.83%, and Hana Financial Group's NIM rose 9bp to 1.80%.

Non-interest income was relatively subdued. KB Financial's non-interest income stood at 1.9693 trillion KRW, down 25.1% year-on-year. Shinhan Financial showed growth with a 2.5% increase in fee income compared to the previous year, but declines in securities, foreign exchange & derivatives income, and insurance-related income led to a 7.7% decrease to 1.8415 trillion KRW. Hana Financial Group's non-interest income dropped 33.5% to 686.4 billion KRW. Woori Financial Group increased by 8.6% to 783 billion KRW.

Asset quality remained at a sound level. As of the end of June, KB Financial's group non-performing loan (NPL) ratio was 0.32%, indicating that asset quality indicators are still being managed stably despite the rising interest rate environment. Notably, the NPL coverage ratio reached an industry-leading 222.4%, enhancing loss absorption capacity against future uncertainties. Shinhan Financial recorded an NPL ratio of 0.38% and an NPL coverage ratio of 209%. Woori Financial Group maintained stable levels with an NPL ratio of 0.30% and a delinquency rate of 0.21%, while its high-quality asset ratio and NPL coverage ratio were 89.6% and 210.3%, respectively. Hana Financial Group's NPL ratio at the end of Q2 was 0.37%, and its NPL coverage ratio increased by 4.22 percentage points from the previous quarter to 164.7%. The group's delinquency rate at the end of Q2 was 0.32%.

Banks Drive Earnings While Securities Lag Amid Market Weakness

The increase in interest income led banks to drive the group's strong earnings. KB Kookmin Bank's net profit in the first half rose 21.4% to 1.7264 trillion KRW due to loan growth and increased interest income. Shinhan Bank also expanded by 22.9% to 1.683 trillion KRW. Both accounted for more than half of their respective group's total net profit. Woori Bank posted 1.559 trillion KRW, up 21.6%, and Hana Bank recorded 1.3736 trillion KRW, a 9.6% increase.

The insurance and card sectors performed relatively 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 increased by 12.4% to 412.7 billion KRW (including gains from real estate sales), showing resilience given the relatively unfavorable funding and business conditions. However, life insurance subsidiaries faced challenges. Prudential Life's net profit was 157.7 billion KRW, down 18% year-on-year, and Shinhan Life's net profit decreased 10% to 277.5 billion KRW. Woori Card increased by 10.6% to 134 billion KRW. Hana Card improved its performance with increased fee income in Q2 despite headwinds such as merchant fee reductions, proactive reduction of high-risk loan assets for risk management, and increased general administrative expenses due to special retirements, posting a net profit of 118.7 billion KRW.

On the other hand, securities affiliates suffered from poor stock market conditions. KB Securities and Shinhan Investment Corp's net profits in the first half were 182 billion KRW and 189.1 billion KRW, respectively, down 51.4% and 41.4% year-on-year. Hana Securities recorded 139.1 billion KRW, a 49.6% decrease.

The four major financial holding companies also announced shareholder-friendly policies such as quarterly dividends. KB Financial decided on a quarterly dividend of 500 KRW per share and resolved to retire treasury shares worth 150 billion KRW for the second time this year. Shinhan Financial also declared a quarterly dividend of 400 KRW per share in Q1 and plans to decide on the Q2 dividend level at the board meeting next month. Woori Financial will pay an interim dividend of 150 KRW per share, and Hana Financial will pay an interim dividend of 800 KRW per share.

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