In the Era of High Interest Rates... Foreign Banks' Performance Also Sailing Smoothly

SC Jeil Bank and Korea Citi Bank Both Show Strong 3Q Performance
Impact of Labor Cost Reduction and Interest Income Growth

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[Asia Economy Reporter Minwoo Lee] Major foreign banks operating in Korea also posted strong results in the third quarter of this year. Although the proportion of retail banking is small, this is attributed to the improvement in net interest margin (NIM) during the period of rising interest rates.

According to the financial industry on the 15th, SC First Bank recorded a net profit of 106.6 billion KRW in the third quarter of this year. This is an increase of 34.3% compared to the same period last year. It nearly doubled compared to the previous quarter, recovering net profit to the 100 billion KRW level. The cumulative net profit up to the third quarter was 318.7 billion KRW, a 20.6% increase compared to the same period last year. Growth in interest income and cost savings from large-scale special retirement implemented at the end of last year were key factors.

Interest income rose by 25.9% year-on-year to 310.5 billion KRW. SC First Bank explained, “We steadily strengthened our business base and increased loan assets, and the improvement in NIM had a positive effect.” However, non-interest income was 73.7 billion KRW, down 2.9% from the same period last year. This is attributed to sluggish asset management (WM) business due to difficult market conditions and increased losses from the disposal of bonds and other securities caused by the sharp rise in interest rates.

As of the end of the third quarter this year, total assets stood at 115.8547 trillion KRW, an increase of 27% (24.6416 trillion KRW) compared to the third quarter of last year. SC First Bank explained that the main reason was the increase in derivative-related assets due to expanded market volatility.

Korea Citibank, which has begun withdrawing from retail banking, also benefited from the high-interest-rate era. It recorded a net profit of 61.2 billion KRW in the third quarter of this year, a 198% increase compared to the same period last year. Compared to 38.7 billion KRW in the previous quarter, net profit increased by about 1.6 times. The cumulative net profit up to the third quarter this year also grew 39% year-on-year to 140 billion KRW.

A Korea Citibank official explained, “Despite asset reduction due to the phased abolition of consumer finance, interest income increased and labor costs decreased.”

In fact, Korea Citibank’s total revenue in the third quarter was 239.3 billion KRW, down 6.7% from the same period last year. Of this, interest income was 202 billion KRW. This is the result of NIM improvement as interest rates rose. On the other hand, non-interest income was 37.3 billion KRW, down 36.7% during the same period. This was due to reduced revenue in the personal customer asset management sector following the phased abolition of consumer finance. However, cost reduction also proceeded due to the abolition of consumer finance. Labor costs decreased, and third-quarter expenses were 141.8 billion KRW, down 33.1% year-on-year.

Customer loan assets in the third quarter were 17.9 trillion KRW, down 30.6% compared to the same period last year. Besides retail loans such as household loans being withdrawn, corporate loans also decreased by 30.2% year-on-year. Korea Citibank explained that although foreign currency loans and purchased foreign exchange increased, repurchase agreement bond purchases and loans to individual business owners decreased.

Due to the suspension of new consumer deposits, deposits in the third quarter were 23.7 trillion KRW, down 21.8% compared to the same period last year. Yoo Myung-soon, CEO of Korea Citibank, said, “We are smoothly proceeding with the phased abolition of the consumer finance sector, prioritizing customer protection and support. Despite the worsening domestic and international economic environment, we will gain customers’ trust and achieve sustainable growth through investments in IT systems and talent development.”

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