SC Jeil Bank Reports H1 Net Profit of 204 Billion KRW, Down 2.5% YoY

"One-Time Expense Incurred Related to Hong Kong H Index ELS"

SC Jeil Bank announced on the 14th that it recorded a net profit of 204 billion KRW in the first half of this year. This is a decrease of 5.2 billion KRW (2.5%) compared to the same period last year (209.2 billion KRW). The bank explained that this was due to recognizing an estimated compensation amount of 96.8 billion KRW for Hong Kong H-Index (Hang Seng China Enterprises Index·HSCEI) based equity-linked securities (ELS) products as a one-time non-operating expense, despite growth in non-interest income, cost management, and a decrease in provisions for loan losses.

Operating profit was 347.1 billion KRW, an increase of 68.9 billion KRW (24.8%) compared to 278.2 billion KRW in the same period last year. Interest income decreased by 5.3% year-on-year due to a reduction in asset size despite an improvement in net interest margin (NIM). Non-interest income increased by 14.2% year-on-year due to higher sales commissions in the retail finance group’s wealth management (WM) division.

Regarding expenses, despite an increase in personnel costs due to regular wage hikes, efforts to reduce costs led to a decrease of 43.9 billion KRW (9.1%) compared to 480.2 billion KRW in the same period last year. Provisions for loan losses amounted to 21.6 billion KRW, down 34.5 billion KRW from the previous year, reflecting a base effect from proactive additional reserves for corporate loans and project financing (PF) loans made last year.

The return on assets (ROA) was 0.48%, up 0.06 percentage points year-on-year, while the return on equity (ROE) was 7.65%, down 0.28 percentage points compared to the same period last year. Due to the impact of rising interest rates and economic recession, non-performing loans (NPLs) for corporate and household sectors increased, causing the NPL ratio to rise by 0.12 percentage points year-on-year to 0.43%. The loan loss coverage ratio fell by 22.54 percentage points from the previous year to 211.17%.

As of the end of June, total assets stood at 86.3955 trillion KRW, an increase of 694.7 billion KRW (0.8%) from 85.7008 trillion KRW at the end of December last year. The common equity tier 1 (CET1) ratio was 17.69%, continuously exceeding regulatory requirements, maintaining sufficient loss absorption capacity and capital soundness.