Domestic Banks See Record-High Net Profit in First Half Despite 100 Billion Won Drop in Interest Income

Interest Income Down by 100 Billion Won
Net Interest Margin Narrows
Net Profit Up by 2.3 Trillion Won

Yonhap News

In the first half of this year, domestic banks saw their interest income decrease slightly to 29.7 trillion won, compared to the record high in the same period last year. However, net profit increased by more than 2 trillion won.

According to the '2025 First Half Domestic Bank Business Performance' report released by the Financial Supervisory Service on August 21, banks' net profit for the first half of this year reached 14.9 trillion won, an increase of 2.3 trillion won (18.4%) compared to the same period last year.

By item, domestic banks' interest income was 29.7 trillion won, a decrease of 1 trillion won (-0.4%) compared to the same period last year (29.8 trillion won), which was the largest ever. This was due to a narrowing net interest margin, despite an increase in interest-earning assets.

Non-interest income was 5.2 trillion won, up 1.8 trillion won (53.1%) from the same period last year. This increase was mainly due to higher foreign exchange and derivatives-related profits (1.9 trillion won) and securities-related profits (800 billion won), as a result of a drop in exchange rates and market interest rates during the first half of the year.

Selling and administrative expenses amounted to 13.7 trillion won, up 800 billion won (6.5%) from a year earlier. Labor costs and material costs increased by 600 billion won and 200 billion won, respectively.

Loan loss expenses for domestic banks in the first half of the year were 3.2 trillion won, up 600 billion won (23.3%) from the same period last year. This was mainly due to an increase in delinquency rates on won-denominated loans, which was influenced by the economic slowdown.

Non-operating profit and loss turned from a deficit to a profit of 1.5 trillion won, mainly due to a base effect from provisions related to equity-linked securities (ELS).

In the first half of the year, the return on assets (ROA) of domestic banks was 0.75%, up 0.08 percentage points from the same period last year, while the return on equity (ROE) was 10.18%, up 1.08 percentage points over the same period.

The Financial Supervisory Service stated, "Given the ongoing economic slowdown, there is a high possibility that loan loss expenses will increase, especially in vulnerable sectors such as small and medium-sized enterprises and individual business owners," adding, "We will continue to encourage banks to strengthen their loss-absorbing capacity so that they can be prepared for the possibility of increased credit risk."

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