Net Profit of South Korean Banks Unchanged in Q2 of 2020


SEOUL, Aug. 29 (Yonhap) — The net profit of twenty South Korean banks remained the same in the second quarter (April-June) of 2020 as compared to the first three months of the year, according to the Financial Supervisory Service (FSS). The overall figure of 7.1 trillion won (US$5.4 billion) was kept steady due to an increase in the Korea Development Bank’s (KDB) net profit, which offset a decrease in ordinary banks’ net profit.

The interest income of the twenty banks was the same at 14.7 trillion won in the second quarter, with a rise in interest-bearing assets despite a drop in the net interest margin (NIM). The return on assets (ROA) and return on equity (ROE) ratios, however, decreased by 0.01 percentage point and 0.37 percentage point respectively.

The non-interest income of the twenty banks fell by 15 percent to 1.8 trillion won in the second quarter due to a decrease in profit from stocks and bonds caused by high borrowing costs. The aggregate loan loss expenses of the twenty banks decreased by 18.9 percent to 1.4 trillion won, however, the figure jumped to 2.6 trillion won when the KDB’s provision reversal of Hanwha Ocean was excluded.

The FSS said it will continue to monitor the bad debt allowance of banks and push for a raise in the countercyclical capital buffer ratio, which requires banks to hold more capital to secure financial stability, in light of a global economic slowdown and monetary tightening as well as China’s real estate crisis.

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