Banks Achieve Record Profits Amid Interest Rate Hikes... Top 4 Financial Holding Companies' Q3 Net Income Nears 5 Trillion Won

[Asia Economy Reporter Buaeri] The four major financial holding companies?KB, Shinhan, Hana, and Woori Financial Groups?achieved a record-breaking performance this year by posting nearly 5 trillion KRW in net income for the third quarter. Interest income driven by rising interest rates led to the strong performance of these financial holding companies.

According to the management performance disclosed by the four major financial holding companies on the 25th, their combined net income for the third quarter totaled 4.8876 trillion KRW, an 18.6% increase compared to last year. The cumulative net income of the four major holding companies up to the third quarter this year reached 13.8544 trillion KRW. Shinhan Financial Group surpassed KB Financial to become the leader in cumulative net income, reflecting gains from the sale of its securities building in the third quarter results.

Shinhan Reclaims Leading Bank Position

Shinhan Financial Group's net income for the third quarter rose 42.9% year-on-year to 1.5946 trillion KRW. The cumulative net income from the first to the third quarter also increased by 21.2% year-on-year to 4.3154 trillion KRW, marking the highest cumulative third-quarter performance in Shinhan Financial's history.

Strong performance in interest income drove Shinhan Financial's growth. Shinhan's interest income for the third quarter increased by 2.7% from the previous quarter to 2.716 trillion KRW. Although funding costs rose in the non-bank sector, improvements in the bank's net interest margin (NIM) and growth in loan assets centered on corporate loans supported this increase.

The sale of Shinhan Investment Corp.'s building also contributed to the increase in net income. Excluding the pre-tax proceeds of 443.8 billion KRW from the sale, Shinhan Financial's net income was recorded at 1.2728 trillion KRW.

KB Financial Group posted a net income of 1.2713 trillion KRW for the third quarter, down 2.1% year-on-year and 2.5% quarter-on-quarter. KB Financial explained, "The base effect of a one-time gain of approximately 123 billion KRW from the sale of property by the non-life insurance business in the second quarter" and added, "Excluding this, the results increased by 7.7% compared to the previous quarter."

The cumulative net income for the third quarter was 4.0279 trillion KRW, up 6.8% (255.5 billion KRW) year-on-year. KB Financial added that loan growth and expansion of net interest margin (NIM) increased net interest income, reflecting the fruits of thorough cost management.

Hana and Woori Battle for Third Place

Hana Financial performed well again by surpassing 1 trillion KRW in net income for the third quarter. The third-quarter net income rose 20.8% year-on-year to 1.1219 trillion KRW.

Interest income was 2.2966 trillion KRW, and fee income was 428.7 billion KRW. Interest income increased by 5.7% from the previous quarter, while fee income decreased by 12.0%. The group's net interest margin (NIM) for the third quarter was 1.82%, up 18 basis points (1bp = 0.01%) year-on-year and 0.2bp quarter-on-quarter.

Woori Financial disclosed that its third-quarter net income increased 5.8% year-on-year to 899.8 billion KRW. The cumulative net income from the first to the third quarter reached a record high of 2.6617 trillion KRW, up 21.1% year-on-year. Woori Financial explained that interest income improved due to loan growth centered on corporate loans and active management of funding costs.

Four Major Holding Companies: "No Concerns Regarding PF"

Meanwhile, the four major financial groups stated that there are no issues concerning the real estate project financing (PF) market, where concerns about tightening liquidity have recently increased.

Im Pil-gyu, Vice President and Chief Risk Officer (CRO) of KB Financial, said, "Since July last year, including specific affiliates, we have conducted comprehensive inspections, with checks in May and August this year, and are currently conducting another full inspection. Even if extreme risks are identified in individual evaluations, losses are expected to be limited."

Bang Dong-kwon, Vice President and CRO of Shinhan Financial, said, "Concerns about real estate PF and bridge loans have increased, but we are strengthening limit management and screening. The proportion of real estate PF and bridge loans in total credit is about 2%, and among these, the portion of non-performing loans is about 20 billion KRW, which is well managed."

Kim Ju-seong, Chief Risk Officer (CRO) of Hana Financial Group, said, "The group has managed the total amount related to real estate PF, and all affiliates, including banks, consider this when setting annual business plans. Regarding exposure to the Legoland PF asset-backed commercial paper (ABCP), neither Hana Securities nor any subsidiary of Hana Financial Group is involved." Woori Financial also stated, "All affiliates of the group have carefully managed exposures such as real estate loans."

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