South Korea's five largest financial holding companies posted a combined first-half net profit exceeding 13 trillion won ($8.85 billion), setting an all-time record. A surging stock market — with the Kospi briefly topping 9,000 — along with government-backed corporate lending drove gains in both non-interest and interest income. The strong first-half performance has the industry on track to break its full-year earnings record as well.
The five groups — KB Financial Group, Shinhan, Hana, Woori Financial Group and NH — earned a combined 13.12 trillion won in net profit for the period, up 9.7 percent from 11.95 trillion won a year earlier, according to industry data released Sunday. It marks the first time the groups' combined first-half net profit has surpassed 13 trillion won. Second-quarter net profit also hit a record, rising 9.6 percent year-on-year to 6.92 trillion won.
KB Financial Group led the pack with a record 3.88 trillion won in first-half net profit, approaching the 4 trillion won mark. Shinhan Financial Group also posted a record 3.44 trillion won. Hana Financial Group (2.4 trillion won), NH Financial Group (1.78 trillion won) and Woori Financial Group (1.61 trillion won) followed. Woori, which contracted in the first quarter, managed a rebound in the second.
Non-interest income was a major driver of the strong results. The five groups' combined non-interest income for the first half reached 10.9 trillion won, up 2.36 trillion won from 8.54 trillion won a year earlier.
The gains were largely attributed to a surge in stock trading volumes and fee income from the sale of products including ETFs. NH Investment saw first-half net profit jump 107.5 percent year-on-year to 965.2 billion won; KB Securities surged 135 percent to 796.3 billion won; Shinhan Investment climbed 123.1 percent to 577.7 billion won; and Hana Securities rose 155.7 percent to 273.1 billion won.
Interest income came in at 26.55 trillion won, up 1.36 trillion won from the same period last year. The increase was smaller than the gain in non-interest income, but still exceeded 1 trillion won.
Despite tighter household debt management by financial regulators, robust growth in corporate lending — a pillar of the government's "productive finance" policy — underpinned the rise in interest income. Escalating tensions in the Middle East have stoked inflation concerns and pushed market interest rates higher, further widening the groups' net interest margins.
The industry expects the first half to mark the start of sustained growth at non-banking subsidiaries. Non-banking units accounted for 44 percent of KB Financial Group's earnings and nearly 35 percent at Shinhan Financial Group. The figure stood at 19 percent for Hana Financial Group and 22 percent for Woori Financial Group, which completed its non-banking portfolio relatively recently.
Having set a first-half record, the industry expects the groups to surpass their full-year earnings record as well.
The five groups posted combined annual net profit of 20.47 trillion won last year, a bar analysts say the current trajectory will clear with ease.
While the Kospi has pulled back and is hovering around the 7,000 level, signals from the Bank of Korea and other central banks worldwide pointing toward tighter monetary policy are a positive for financial holding companies that rely on interest income as their primary revenue source. "All financial institutions are expanding corporate lending in line with the government's productive finance policy, and we expect lending to small and medium-sized enterprises in particular to generate strong returns for now," an industry official said. "We are also maintaining robust loss-absorption capacity in line with our conservative risk management approach."
hyuk@heraldcorp.com
