Core affiliates Busan and Gyeongnam Banks shrink over 20%
Capital, securities, and other non-bank sectors show strong performance
[Asia Economy Reporter Minyoung Kim] BNK Financial Group announced on the 29th that it achieved a cumulative net profit of 447.4 billion KRW for the third quarter of this year. This represents a 15.5% decrease compared to the same period last year (560.4 billion KRW).
BNK Financial Group explained, "Although the net profit decreased compared to the same period last year due to a decline in interest income and an increase in loan loss provisions, the increase in fee income centered on project financing (PF), improved performance in non-bank sectors such as securities and capital, and the provisioning in preparation for economic downturn caused by the spread of COVID-19 indicate a favorable outlook."
By sector, interest income was 1.6199 trillion KRW, down 2.3% compared to the same period last year. Loans were expanded mainly to local small and medium-sized enterprises, but the impact of net interest margin (NIM) decline due to interest rate cuts was significant.
Fee income was 282.8 billion KRW, showing an effect of expanded non-interest income, with a sharp increase of 43.9% compared to the same period last year, mainly driven by PF fees. Fee income from major affiliates including Busan Bank and Gyeongnam Bank all showed an increasing trend, and BNK Investment & Securities recorded the highest profit growth rate, coinciding with a favorable stock market.
The net profits of core affiliates Busan Bank and Gyeongnam Bank were 257.7 billion KRW (-27.58% YoY) and 148.0 billion KRW (-8.93% YoY), respectively, showing a decline compared to the previous year.
The non-bank sector led the performance, with 119.6 billion KRW, a 23.6% increase compared to the same period last year. BNK Capital showed a 7.4% increase in net profit compared to the same period last year due to increased fee income and stable loan loss cost management, while BNK Securities saw a sharp 89.0% increase in net profit compared to the same period last year due to strong corporate finance (IB) performance and increased gains related to securities. BNK Asset Management also continues to see increased fee income as assets under management grow.
The group’s asset soundness indicators showed an NPL ratio of 0.94%, down 0.11 percentage points from the previous quarter, and a delinquency ratio of 0.61%, improved by 0.16 percentage points from the previous quarter.
Capital adequacy indicators, the Basel III total capital ratio and common equity tier 1 (CET1) ratio, rose by 0.50 percentage points and 0.71 percentage points respectively compared to the end of last year due to the early adoption of the Basel III final rules, recording 13.45% and 10.25%.
A company official stated that if the group’s internal rating-based approach, currently being promoted with approval targeted for the first half of next year, is applied, a significant increase in the CET1 ratio is also expected.
A BNK Financial Group official said, “We will continue to pursue the group’s strategy to expand non-bank and non-interest income sectors and fulfill the role of a regional financial institution supporting small and medium-sized enterprises, while preparing for the possibility of an economic downturn and striving to enhance the group’s financial stability.”
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