The four major financial holding companies, including KB, Shinhan, Hana and Woori, posted record-breaking performance in the first half of this year thanks to a rise in interest rates. The combined net income of banks, insurance companies, and securities companies, which are among the four major financial holding companies, amounted to 8,966.3 billion won. Interest income from the four major financial holding banks also exceeded 15 trillion won. The second quarter net profit decreased compared to the first quarter due to the expansion of provisions ahead of the end of the maturity extension of loans for small business owners and the self-employed, which started after the COVID-19 outbreak in September, and the poor performance of non-bank affiliates such as securities and insurance.
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○Shinhan Bank also cruises overseas business
Shinhan Financial Group announced on the 22nd that it recorded 1.32 trillion won in net profit in the second quarter of this year. Although it decreased by 5.7% from the first quarter of last year (1.4 trillion won), which was a record high, it increased by 5.5% from the second quarter of last year (1.2518 trillion won). Net profit for the first half of the year amounted to KRW 2.7208 trillion, an increase of 11.3% from the same period last year.
In the second quarter, Shinhan Financial surpassed KB Financial Group (1.303 trillion won), which posted results the previous day, by 16.9 billion won in net profit. In the first half of the year, KB Financial Group (2.75 trillion won) earned 35.8 billion won more than Shinhan Financial Group. In the third quarter, the profit from the sale of Shinhan Financial Investment’s Yeouido office building in Seoul (approximately 460 billion won) will be reflected in Shinhan Financial’s earnings, so the competition between KB and Shinhan for the ‘Leading Bank’ position is expected to intensify.
Shinhan Financial’s earnings were led by interest income. Interest income in the second quarter was 2.64 trillion won and 5,131.7 billion won in the first half, up 6.3% and 17.3%, respectively, from a year ago. Net interest margin (NIM), a key profitability indicator, was 1.98% in the second quarter, surpassing KB Financial Group (1.96%). Shinhan Vietnam Bank and SBJ Bank of Japan posted a net profit of 154.1 billion won, up 19.4 percent from the first quarter, as net profit increased by 50.2 percent and 32.5 percent, respectively, from the previous year.
Shinhan Bank, a core affiliate, posted a net profit of 820 billion won in the second quarter, beating Kookmin Bank (749.1 billion won). However, due to the stock market slump, Shinhan Financial Investment’s net profit in the second quarter fell 45.3% from last year to only 84.6 billion won. Shinhan Financial Group accumulated 601.8 billion won in the first half of this year, including 358.2 billion won in provisions in the second quarter. This is a 67.6% increase from the first half of last year (359 billion won).
○ Woori Financial and Hana Financial
Woori Financial Group’s net profit for the second quarter was KRW 922.2 billion, up 22.4% from the second quarter of last year. Net profit in the first half also increased by 24% compared to the same period of the previous year to 1.76 trillion won. Both quarterly and semi-annually, it is an all-time high. Interest income in the second quarter (2,115 billion won) and first half (4.103 trillion won) in interest income increased by 6.4% and 23.5%, respectively, from the previous year. Woori Bank, a core affiliate, also recorded a net profit of 1.5545 trillion won based on interest income of 3.481.5 trillion won in the first half of the year. Woori Financial, which was unable to escape ‘fourth place in the future’ among the four major financial holding companies, surpassed Hana Financial in the first half of the year. Analysts say that the lack of securities and insurance affiliates, whose performance has stagnated in the face of headwinds from interest rate hikes, is attributable to the analysis.
Hana Financial Group’s net profit for the first half of the year was 1.47% lower than the previous year, recording 1.727.4 trillion won. Net profit in the second quarter also decreased by 10% compared to the same period of the previous year to 825.1 billion won. Hana Bank’s net profit in the first half was 1.3736 trillion won, up 9.6% from the same period last year, but Hana Securities’ net profit was only 139.1 billion won, down 49.6% from the previous year. Hana Financial explained that an increase in one-off expenses due to special retirement in the first quarter and additional provision for bad debts had an impact.
IBK announced on the same day that its net profit for the first half of the year was 1.22 trillion won, up 1 percent from the same period last year.
By Kim Bo-hyeong/Park Sang-yong, staff reporters kph21c@hankyung.com
