BNK Financial Group posts W411.8b in H1 net profit, down 13.5% on real estate fund impact

BNK Financial Group posted net profit in the 410 billion won ($280 million) range in the first half of this year, but earnings fell as a base effect from a one-time real estate fund gain last year and an accounting loss this year weighed on results. Excluding one-time factors, however, the group said its core profitability improved.

BNK Financial Group said Tuesday that its consolidated net profit attributable to controlling interests reached 411.8 billion won in the first half of this year, down 64 billion won, or 13.5 percent, from 475.8 billion won in the same period last year.

The decline was driven by a base effect from the 54.4 billion won liquidation gain on the BNK Gangnam Core Office Fund recorded last year, as well as a one-time accounting loss of 44 billion won incurred this year during the acquisition of external stakes in the Yeouido Core Office Fund. The group noted that recurring profitability improved, with adjusted operating profit rising and provisions falling.

The banking segment posted first-half net profit of 356.2 billion won, down 54 billion won from a year earlier, as net profit at Busan Bank and Kyongnam Bank fell by 50.5 billion won and 3.5 billion won, respectively.

The non-banking segment, by contrast, showed marked improvement. Earnings gains at BNK Capital (9.1 billion won), BNK Investment & Securities (23.1 billion won), BNK Savings Bank (2.3 billion won), BNK Asset Management (26 billion won) and BNK Venture Investment (2.8 billion won) lifted the segment's combined net profit to 172.6 billion won, up 63.8 billion won from a year earlier.

Asset quality indicators also improved. The substandard-and-below loan ratio stood at 1.46 percent and the delinquency rate at 1.34 percent, improving by 11 basis points and 8 basis points, respectively, from the previous quarter. The group said it would continue proactive risk management and efforts to strengthen asset quality, noting that both ratios remain below the industry average.

The common equity tier 1 ratio fell 16 basis points from the previous quarter to 12.14 percent, as asset growth focused on high-quality assets and shareholder return policies offset gains from efficient risk-weighted asset management and higher retained earnings.

The board also approved a quarterly cash dividend of 150 won per share. Approximately 3.49 million treasury shares — worth about 60 billion won — acquired in the first half of this year are set to be fully retired in the third quarter.

"Excluding real estate fund-related one-time factors, first-half net profit on a recurring basis came to 455.8 billion won, up 8.2 percent year on year, reflecting consistently improving core profitability," said Park Seong-uk, chief financial officer and executive vice president of BNK Financial Group. He added that the group would work to strengthen its stable earnings base while doing its utmost to manage capital and asset quality.