Five Major Financial Groups Enter 20 Trillion Won Net Profit Era... Non-interest Income Drives Results

Interest income up 2% while non-interest income soars 18%
"Bullish stock market" turns fee and investment income into key drivers
Accelerating non-interest income growth this year through portfolio diversification

The five major financial groups (KB, Shinhan, Hana, Woori, and NH) opened the era of 20 trillion won in net profit for the first time ever last year. Despite interest rate cuts, they maintained solid interest income, and significantly increased non-interest income such as fees and investment returns on the back of a booming stock market, thereby expanding their profit base.

According to the financial sector on February 12, the combined net profit of the five major financial groups last year reached a record high of 20.47 trillion won. This represents an 8.8% increase compared with the previous year’s 18.8069 trillion won.

By holding company, KB Financial Group solidified its position as the “leading financial group,” posting 5.843 trillion won, up 15.1% year-on-year. Shinhan Financial Group recorded 4.9716 trillion won, an 11.7% increase, putting it on the verge of joining the “5 trillion won club.” Hana Financial Group grew 7.1% year-on-year to 4.0029 trillion won, surpassing the 4 trillion won mark for the first time, while Woori Financial Group (3.1413 trillion won) and NH Nonghyup Financial Group (2.5112 trillion won) also continued to improve their performance, growing 1.79% and 2.3%, respectively.

Non-interest income jumps 18%... "Reduced reliance on banking"

Despite household loan regulations and a decline in net interest margin (NIM) last year, financial holding companies managed to surpass 20 trillion won in net profit, driven by solid defense of interest income at their core banking subsidiaries and a surge in profits at their non-bank affiliates. Last year, the five major financial groups’ interest income totaled 51.373 trillion won, up 1.98% from the previous year. Although NIM contracted due to interest rate cuts, interest income held up relatively well, mainly thanks to the continued increase in accumulated loan assets.

In particular, the sharp rise in non-interest income led overall profit growth. Buoyed by fee and securities gains at securities affiliates and by foreign exchange and derivatives income amid a bullish stock market last year, total non-interest income came to 15.0302 trillion won, an 18% surge from 12.7381 trillion won a year earlier.

KB Financial Group’s non-interest income rose 16.0% year-on-year to 4.8721 trillion won. Shinhan Financial Group and Hana Financial Group also recorded non-interest income of 3.7442 trillion won and 2.2133 trillion won, respectively, up 14.4% and 14.9% from 2024. Woori Financial Group’s non-interest income increased 24.0% year-on-year to 1.9266 trillion won. Nonghyup Financial Group likewise posted 2.274 trillion won in non-interest income, up 26.4% from the previous year.

The five major financial groups to diversify portfolios this year by expanding non-bank and non-interest segments

The financial holding companies plan to further reduce their dependence on interest income this year and concentrate on strengthening “non-interest and non-bank” businesses. KB Financial Group aims to increase profits in corporate and investment banking (CIB) and capital markets. The group intends to generate returns by allocating resources not only to corporate lending but also to high value-added areas such as artificial intelligence (AI), semiconductors, innovation, and small and medium-sized enterprises (SMEs).

Shinhan Financial Group is targeting a 10% return on equity (ROE) and plans to restore brokerage business in its securities arm, expand its issuance bill business, and carry out asset rebalancing at subsidiaries such as its card and capital companies. Hana Financial Group is seeking to diversify its business portfolio with the goal of raising the share of profit from non-bank operations to 30%.

Woori Financial Group plans to integrate AI into work processes and sales sites to create new businesses and increase non-interest income by 18% compared with 2025. Nonghyup Financial Group has a similar strategy. It plans to expand capital supply focused on venture capital and future strategic industries, while continuously developing and implementing a financial model unique to Nonghyup Financial Group.

An official at one of the financial holding companies said, “With lending regulations continuing, it may be difficult to expect profit growth if last year’s surging stock market stabilizes,” adding, “There is effectively no other choice but to plan for more diversified portfolio structures.”

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