Commercial Banks' Net Profit 6.7 Trillion KRW, Down 3.1%
Internet Banks' Net Profit Doubles to 340 Billion KRW
In the first half of this year, the net income of domestic banks reached 12.6 trillion won, and interest income amounted to 29.8 trillion won. Internet banks achieved nearly the same performance in the first half alone as their total results from the previous year.
According to the 'Domestic Banks' Operating Performance (Provisional)' released by the Financial Supervisory Service on the 22nd, the net income of domestic banks in the first half of this year was 12.6 trillion won, down 11% (1.5 trillion won) compared to the same period last year. During the same period, the return on assets (ROA) of domestic banks was 0.67%, a decrease of 0.12 percentage points. The return on equity (ROE) was 9.03%, down 1.82 percentage points.
The net income of commercial banks in the first half was 6.7 trillion won, a decrease of 3.1% (200 billion won) compared to the same period last year. On the other hand, regional banks and internet banks recorded 700 billion won and 340 billion won, respectively, increasing by 8.5% and 100.3%. The net income of internet banks in the first half nearly matches last year's total performance (350 billion won).
The net income of special banks was 4.8 trillion won, down 24.5% (1.6 trillion won) compared to the same period last year. This is analyzed as a base effect due to a significant increase in net income in the first half of last year from the normalization of Hanwha Ocean's management.
Looking at the domestic banks' performance by item in the first half, interest income was 29.8 trillion won, up 1.4% (400 billion won) compared to the same period last year. This is the largest amount on a half-year basis ever recorded, influenced by a 4.1% increase in interest-earning assets. However, the growth in interest income slowed as the net interest margin (NIM) decreased by 0.06 percentage points compared to the same period last year.
Non-interest income was 3.4 trillion won, down 11.4% (400 billion won) compared to the same period last year. Both fee income and securities-related income increased by 200 billion won each, but foreign exchange and derivatives-related income decreased by 600 billion won.
Selling and administrative expenses were 12.8 trillion won, up 2.3% (300 billion won) compared to the same period last year. Labor costs increased by 200 billion won, and material costs rose by 100 billion won.
Loan loss expenses were 2.6 trillion won, down 15.9% (500 billion won) compared to the same period last year. Despite the reversal of provisions related to Hanwha Ocean by special banks in the first half of last year, the base effect is due to a significant increase in domestic banks' loan loss expenses following improvements in the loan loss provision calculation method.
Non-operating losses were 1.4 trillion won, a decrease of 2.3 trillion won compared to the same period last year. In the first half of last year, non-operating income increased due to the reversal of impairment losses on Hanwha Ocean investment shares, but in the first half of this year, non-operating income decreased due to the establishment of a provision liability of 1.4 trillion won related to equity-linked securities (ELS).
A Financial Supervisory Service official stated, "In the second half, there is a possibility of increased financial market volatility due to uncertainties in major countries' monetary policies and geopolitical risks," adding, "We will continue to encourage the expansion of sufficient loss absorption capacity so that banks can faithfully perform their fundamental role of fund intermediation even in times of crisis."
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