Domestic Financial Holding Companies Report Consolidated Net Income of 12.4 Trillion KRW in H1, Up 7.9% YoY

[Asia Economy Reporter Song Seung-seop] The consolidated net income of domestic financial holding companies in the first half of this year was tentatively estimated at 12.4001 trillion KRW. This represents an increase of 904 billion KRW (7.9%) from 11.4961 trillion KRW in the first half of last year.

According to the Financial Supervisory Service's '2022 First Half Financial Holding Companies Management Performance' data on the 6th, banks recorded the largest increase in net income at 965.2 billion KRW (13.9%). The insurance sector had the highest growth rate at 30.3% (359.2 billion KRW). On the other hand, the financial investment sector saw a decline of 1.0325 trillion KRW (35.2%) due to a decrease in fee income and other factors. However, focusing only on bank-affiliated holding companies, the increase in net income in the second quarter decreased by 527.9 billion KRW compared to the first quarter due to an increase in loan loss provisions.

The profit share by subsidiary showed that banks accounted for 56.3%, up 4.3 percentage points from 52.0% in the same period last year. The insurance sector (11.0%) and the credit finance sector (16%) also saw slight increases in their shares. The financial investment sector's share fell by 8.5 percentage points to 13.6% compared to the same period last year.

The consolidated total assets grew by 206 trillion KRW (6.4%) to 3,409 trillion KRW compared to the end of last year (3,203 trillion KRW). Bank total assets increased by 155.5 trillion KRW (6.5%), financial investments by 28.5 trillion KRW (8.9%), and credit finance companies by 20.7 trillion KRW (10.2%). Insurance total assets slightly decreased by 4.07 trillion KRW (1.7%). Among subsidiaries, banks had the highest asset share relative to total assets at 74.5%, unchanged from the end of last year.

As of the end of June, bank holding companies' total capital, core capital, and common equity tier 1 capital ratios were 15.31%, 14.04%, and 12.40%, respectively. Compared to the end of last year, these decreased by 0.28 percentage points, 0.22 percentage points, and 0.33 percentage points, respectively. The non-performing loan ratio of financial holding companies was 0.46%, down 0.01 percentage points from 0.47% at the end of last year. The loan loss provision coverage ratio rose to 166.1%, up 10.2 percentage points from 155.9% at the end of last year, due to an increase in loan loss provision expenses in the second quarter.

The Financial Supervisory Service evaluated that while the asset and net income growth of financial holding companies continues, management soundness indicators such as asset quality remain favorable. Nevertheless, it explained that the impact of increased uncertainty in domestic and international financial markets is evident, such as the shrinking profit size in the financial investment sector.

The Financial Supervisory Service stated, "In preparation for the possibility of deterioration in financial markets and the real economy, we will encourage strengthening risk management across major business sectors of financial holding companies." It added, "In particular, we plan to continuously encourage enhancing loss absorption capacity, such as maintaining sufficient loan loss provisions, to prepare for potential risks including vulnerable borrower loans and real estate exposure."

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