Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
KB retakes leading bank title from Shinhan in Q2
By Park Jae-hyuk
By Park Jae-hyuk
Shinhan Financial Group has lost its status as the most profitable bank ― on a quarterly basis ― here to its rival KB Financial Group, posting an 873.1 billion won ($726 million) net profit in the second quarter, down 12.3 percent from a year earlier, its regulatory filing showed Friday.
In contrast, KB showed an earnings surprise of 981.8 billion won net income with only a 0.9 percent year-on-year drop, despite several difficulties caused by the COVID-19 pandemic.
As for the accumulated earnings for the first half, however, Shinhan which earned 1.8 trillion won defeated KB which posted a 1.71 trillion won net profit.
“Despite the tough business environment due to the economic slowdown and falling interest rates, we reconfirmed our ability to make stable profits thanks to the solid growth in our loan business and non-banking sector,” a KB official said.
Shinhan attributed its earnings decline to its increased provisions for loan losses and impairments, so as to preemptively brace for the negative impact of the COVID-19 pandemic.
“As the impact of the COVID-19 has become severe starting from the second quarter, we've enhanced our risk management measures to brace for the possible spread of the pandemic's impact to the financial sector,” a Shinhan official said.
Analysts have anticipated the result, given that KB was hardly affected by scandals involving the alleged mis-selling of private equity funds (PEFs). Shinhan, Hana and Woori have have had to pay compensation for losses of customers who invested in the funds managed by Lime Asset Management that they sold.
Shinhan admitted the fiasco has partially affected its second-quarter earnings.
“The earnings decrease resulted from the increased loan loss reserves and costs related to the recent fiasco regarding financial products,” the company official said.
KB aims to further improve its profitability in the third quarter, as it formed a strategic alliance with the Carlyle Group in June and is expected to complete the Prudential Life Insurance Company of Korea takeover during the quarter.
“Although the financial authorities have made it difficult for KB to make investments, the group has distinguished itself from other,” Meritz Securities analyst Eun Kyung-wan said, mentioning KB as the top-pick among financial groups.
Meanwhile, Hana Financial Group posted a 687.6 billion won net income in the second quarter, up 4.4 percent from a year earlier. Its first-half earnings reached 1.3 trillion won, up 11.6 percent from a year earlier and the highest since 2012.
In particular, the group decided to pay 500 won per share as interim dividends to its shareholders, although Financial Supervisory Service Governor Yoon Suk-heun had urged financial firms to cut payments to shareholders, so as to secure enough total loss-absorbing capacity and maintain their ability to support businesses.
Hana said its decision was made considering its enough loss-absorbing capacity, contribution of non-banking and global sectors, and promise with shareholders.
Woori Financial Group will announce its second-quarter performance Monday.