Regional Financial Groups Sail Smoothly in Q3 Thanks to Non-Interest Income

Combined Net Profit Up 23% Year-on-Year
Interest Income Rises Only 1.1%
Non-Interest Income Surges 49.3%
"Securities-Related Profits Increase"

The third-quarter net profits of regional financial holding companies (BNK, JB) and iM Financial Group, which is also based in a provincial area, increased compared to the third quarter of last year, driven by a rise in non-interest income. The main factor was an increase in income related to securities held by the holding company affiliates.

According to the financial industry on November 3, the combined net profit of regional financial holding companies in the third quarter of this year amounted to 62.49 billion won. This represents a 23% increase from the third quarter of last year (50.84 billion won). While both interest and non-interest income grew, the increase in non-interest income was particularly notable. The combined interest income of the three holding companies for the third quarter was 1.6751 trillion won, up 1.1% from 1.6568 trillion won in the same period last year. Non-interest income reached 299 billion won, up 49.3% from 200.3 billion won in the third quarter of last year.

The significant increase in non-interest income was due to higher profits related to securities. Compared to the third quarter of last year, the valuation gains on securities held by holding company affiliates rose this year, attributed to factors such as exchange rate and interest rate fluctuations. Kwon Jaejung, Vice President of BNK Financial Group, stated during the earnings announcement, "Other income within non-interest income increased by 96.3 billion won compared to the same period last year," adding, "Profits related to securities or bonds amounted to about 100 billion won." Non-interest income also improved at the five regional banks under the regional financial holding companies (Gyeongnam, Gwangju, Busan, iM, Jeonbuk). The combined non-interest income of these five regional banks in the third quarter of this year was 68.9 billion won, a 31.2% increase from 52.5 billion won in the third quarter of last year.

By holding company, BNK Financial Group saw the largest increase in net profit. BNK Financial's net profit rose 38.3% from 212.8 billion won in the third quarter of last year to 294.2 billion won. Next, iM Financial Group recorded 122.4 billion won, up 19.3% from 102.6 billion won in the same period last year. JB Financial Group posted a net profit of 208.3 billion won, a 7.9% increase from 193 billion won.

The strong performance at BNK Financial was also driven by non-interest income. BNK Financial's interest income decreased by 1.1% from 749.4 billion won in the third quarter of last year to 740.8 billion won. In contrast, non-interest income soared 141.7% from 63.5 billion won in the third quarter of last year to 153.5 billion won. Non-interest income at BNK Financial's Busan Bank and Gyeongnam Bank also rose by 79.8% and 618.2%, respectively, reaching 16 billion won and 23.7 billion won. Among the affiliates, the non-banking sector acted as a buffer for the group's net profit. The banking sector (Gyeongnam and Busan) posted a net profit of 260.2 billion won in the third quarter of this year, up 18.4% from the same period last year. The non-banking sector (BNK Capital, BNK Investment & Securities, BNK Savings Bank, BNK Asset Management) recorded a net profit of 57.2 billion won, up 104.3% from 28 billion won.

Buoyed by its strong performance, BNK Financial plans to secure future growth drivers. Vice President Kwon said, "In the case of real estate project financing (PF), there were significant delinquencies earlier in the year, so we refrained from new business, but in the third quarter, new transactions increased significantly." He added, "Busan Bank handled about 350 billion won in new PF, all with 100% guarantees, and Gyeongnam Bank and BNK Capital also increased PF centered on high-quality projects in the Seoul metropolitan area led by top-tier construction companies, so there is almost no burden for loan loss provisions."

iM Financial Group is recovering from last year’s poor performance. This is mainly because the provision for real estate PF at iM Securities, which was the biggest cause of the poor results, has decreased. Provisions for iM Financial in the third quarter of this year amounted to 105.2 billion won, down 8.4% from the same period last year, and a 66.7% reduction compared to the second quarter of last year (316.1 billion won). For JB Financial Group, whose growth had lagged among regional financial holding companies, a decrease in non-interest income affected its results. JB Financial's non-interest income dropped 17.1% from 68.6 billion won in the third quarter of last year to 56.9 billion won. Jeonbuk Bank under JB Financial recorded a non-interest income deficit, falling from 6 billion won to negative 6.6 billion won.

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