Domestic Banks' Cumulative Net Profit for Q3 Reaches 19.5 Trillion KRW, Up 38.2% YoY

Cumulative Interest Profit Surpasses 44 Trillion Won
Q3 Net Income at 5.4 Trillion Won... Decrease Compared to Previous Quarter

The cumulative net income of domestic banks for the third quarter reached 19.5 trillion KRW, an increase of 5.4 trillion KRW (38.2%) compared to the previous year.

According to the "Domestic Banks' Operating Performance (Preliminary)" released by the Financial Supervisory Service on the 20th, the net income of domestic banks in the third quarter was 5.4 trillion KRW, a 23.9% decrease compared to the previous quarter. Interest income slightly increased due to the growth of interest-earning assets such as loans, but non-interest income declined due to bond valuation and trading losses caused by rising interest rates, and non-operating income decreased due to equity impairment losses.

The return on assets (ROA) for the third quarter was 0.58%, and the return on equity (ROE) was 7.87%, both down 0.2 percentage points and 2.78 percentage points respectively from the previous quarter. The net interest margin (NIM) also fell by 0.04 percentage points from the previous quarter to 1.63%, with all major profitability ratios declining compared to the previous quarter.

The cumulative interest income for the third quarter was 44.2 trillion KRW, an increase of 3.6 trillion KRW (8.9%) compared to the previous year. Interest income in the third quarter was 14.8 trillion KRW, a slight increase of 100 billion KRW (0.1%) from the previous quarter.

The Financial Supervisory Service explained that although the NIM has been declining for three consecutive quarters this year, interest income slightly increased due to the growth of interest-earning assets such as loans.

The cumulative non-interest income for the third quarter was 4.6 trillion KRW, a rise of 3 trillion KRW (177.7%) compared to the previous year. However, non-interest income in the third quarter was 800 billion KRW, a decrease of 900 billion KRW (56.1%) from the previous quarter.

The Financial Supervisory Service stated, "The net income of domestic banks has expanded since last year due to rising interest rates and increased interest-earning assets, but profitability indicators such as net interest margin, ROA, and ROE have been declining this year, showing a gradual weakening of profitability. It is expected that banks' loan loss cost burdens will also increase due to the prolonged high-interest-rate environment and delayed global economic recovery."

They added, "We plan to continuously encourage banks to strengthen risk management and expand loan loss provisions to ensure sufficient loss absorption capacity."

Financial Supervisory Service, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

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