OK Savings Bank, 1Q Net Profit 14.9 Billion KRW... 60% Decrease YoY
OK Savings Bank announced on the 31st that its net profit for the first quarter of this year was 14.9 billion KRW, a 60.4% decrease compared to the same period last year (37.6 billion KRW).
Operating revenue for the first quarter of this year was 415.8 billion KRW, down 8% (36.1 billion KRW) from 451.9 billion KRW in the first quarter of last year. This was due to loan-related income shrinking from 46.3 billion KRW to 2.3 billion KRW. However, interest income (364.9 billion KRW) and securities-related income (2.8 billion KRW) increased by 1.6 billion KRW and 2.2 billion KRW respectively compared to the first quarter of last year, mitigating the decline in profits.
Soundness indicators worsened. As of the end of the first quarter this year, the delinquency rate was 8.87%, up 2.01 percentage points from 6.86% at the end of last year. The delinquency rate for real estate-related loans, including real estate project financing (PF) loans, construction, and real estate businesses, soared 6.13 percentage points from 9.2% at the end of last year to 15.33% at the end of the first quarter this year. The ratio of non-performing loans (NPL) increased by 1.92 percentage points to 9.48%. However, the Basel III (BIS) capital adequacy ratio rose from 12.34% last year to 12.77% in the first quarter of this year.
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An OK Savings Bank official explained, “Net profit decreased compared to last year due to the application of strengthened allowance standards to enhance loss absorption capacity,” and added, “The increase in the delinquency rate reflects the worsening conditions of borrowers, mainly low-income households and small business owners, amid growing domestic and external uncertainties.” The official also stated, “We regularly conduct stress tests and manage soundness indicators by selling or disposing of non-performing loans,” and added, “Considering the loan loss provision ratio, capital strength, and loss absorption capacity, the situation is sufficiently manageable.”
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