KB, Shinhan, Woori post record net profits in 1st half of year

Hana's net profit drops W0.3 trillion to W1.72 trillion

By Yi Whan-woo

Three of the country's major banking groups posted record net profits in the first half of this year on the back of robust interest payments.

The country's top banking group, KB Financial Group, still leads Shinhan Financial Group in its earnings for the first half of the year, while it fell into second place behind the latter in its performance for the second quarter.

In a report released on Thursday, KB Financial Group said it logged a net profit of 2.75 trillion won ($2.09 billion) in the January-June period, up 11.4 percent from a year earlier.

Shinhan Financial Group also surpassed the 2 trillion-won mark in its net profit, announced in a report on Friday. The amount stood at 2.72 trillion won, up 11.3 percent year-on-year.

Also on Friday, Woori Financial Group reported a net profit that jumped 24 percent from a year earlier to 1.76 trillion won.

The record profits of the three left Hana Financial Group, which is one of the nation's “Big 4” banking groups, as the only one that saw a decrease in its first-half earnings.

Its net profit slid down to 1.72 trillion won from 1.75 trillion won a year earlier.

The company attributed its performance mainly to an increase in the amount of allowance for doubtful accounts that totaled 184.6 billion won as of the first half of this year. An allowance for doubtful accounts is a reduction of the total amount of accounts receivable appearing on a company's balance sheet and is considered a bad debt reserve.

Hana Financial Group explained it had preemptively raised the amount to estimate the impact caused by the growing economic uncertainties better.

Accordingly, the group's net profit in the April-June period shrank 9.14 percent year-on-year to 847.6 billion won.

Shinhan Financial Group slightly outperformed KB Financial Group 1.32 trillion won to 1.3 trillion won in terms of net profit for the second quarter.

The quarterly net profit increased by 5.5 percent, year-on-year, for Shinhan. But for KB, it fell 10.3 percent during the cited period.

KB Financial assessed that the weakening won against the U.S. dollar, falling stock prices and other negative factors offset the increase in interest margins, which rose 18.7 percent to 5.44 trillion won year-on-year.

Woori Financial Group saw a 22.4-percent increase in its net profit in the second quarter to 922.2 billion won.

Meanwhile, the banking groups' performance in the second quarter drew attention as they have been reaping profits from hikes in the benchmark interest rates, contrary to borrowers who have been struggling with loan repayment.

Accordingly, lenders have faced mounting pressure from the government to lower their lending rates as a part of efforts to support the financially vulnerable amid the soaring inflation.