SC Jeil Bank, 1Q Net Profit 40.8 Billion KRW... Down 67.8% YoY

Impact of Hong Kong ELS Autonomous Compensation

SC Jeil Bank announced on the 16th that its net profit for the first quarter decreased by 67.8% year-on-year to 40.8 billion KRW. This was due to recognizing an estimated compensation amount of 132.9 billion KRW related to losses from Hong Kong H Index (Hang Seng China Enterprises Index·HSCEI) based equity-linked securities (ELS).

Regarding interest income, despite an improvement in net interest margin (NIM), it decreased by 5.6% compared to the same period last year due to a reduction in asset size. Non-interest income increased by 0.7% as sales commissions in the wealth management (WM) sector of retail banking rose, but this was offset by a decrease in demand for foreign exchange derivatives in corporate banking due to eased market volatility.

In terms of expenses, despite an increase in personnel costs due to regular wage hikes, thorough management and cost-saving efforts led to a decrease of 2.4 billion KRW (1.1%). The provision for loan losses decreased by 18.7 billion KRW to 100 million KRW, reflecting a base effect from proactive additional reserves related to corporate loans and project financing (PF) loans made in the same period last year. Other provisions amounted to 14.9 billion KRW due to reserves related to the mutual growth finance support voluntary program.

Looking at key profitability and soundness indicators, the return on assets (ROA) was 0.19%, down 0.32 percentage points, and the return on equity (ROE) was 3.09%, down 6.58 percentage points. The ratio of non-performing loans classified as fixed or below increased by 0.16 percentage points to 0.43% due to rising interest rates and economic recession effects leading to an increase in corporate and household fixed non-performing loans. The loan loss coverage ratio fell by 39.29 percentage points to 204.9%.

As of the end of the first quarter, total assets stood at 86.6179 trillion KRW, up 917.1 billion KRW (1.1%) from 85.7008 trillion KRW at the end of the previous year. Additionally, the common equity tier 1 capital ratio (CET1) was 16.95%. The bank explained that it continues to exceed regulatory requirements, maintaining sufficient loss absorption capacity and capital soundness.

SC Jeil Bank stated, “In the retail banking sector, we are engaging customers with differentiated global wealth management (WM) strategies and innovative products and services suited for the digital era.” It added, “In corporate banking, we continue to provide differentiated corporate financial services to domestic corporate clients seeking overseas investment and trade by leveraging SC Group’s global network spanning 53 markets worldwide.”

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