Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Savings banks suffer earnings declines in Q2 due to higher costs
A branch of SBI Savings Bank in Seoul / Yonhap
By Anna J. Park
By Anna J. Park
Major savings banks saw earnings nosedive in the second quarter of this year compared to the same period of 2022 due to soaring costs stemming from rising interest rates.
According to public disclosures by the country's top five savings banks in terms of asset size, their aggregate net profit during the second quarter stood at 10.2 billion won ($7.7 million), down a whopping 94.7 percent from a year ago when their quarterly net profit reached 190.7 billion won.
The top five savings banks are SBI, OK, Welcome, Pepper, and Korea Investment savings banks.
Among the five, SBI Savings Bank, which boasts the largest asset size, suffered the steepest fall in net profit in the second quarter compared to the same period last year. The bank's quarterly net profit in the second quarter stood at 6.8 billion won, down 92.1 percent year-on-year.
OK Savings Bank suffered a 60.5 percent decrease in net profit over the same period, while Welcome Savings Bank's net profit fell 37.3 percent. Pepper Savings Bank and Korea Investment Savings Bank each turned to a net loss of 17.6 billion won and a 10.5 billion won during the second quarter, respectively.
The key factor behind the drastic declines was increased costs borne by the banks due to interest rate hikes. The five banks' interest rate costs jumped 111.8 percent year-on-year to 506 billion won in the second quarter.
When calculating the earnings of all 79 savings banks across the country during the first half of this year, the overall sector turned to a net loss of 43.4 billion won. In contrast, the 79 banks' aggregate net profit during the first half of last year was 439.5 billion won.
However, an encouraging sign is that the overall sector's net loss narrowed slightly during the second quarter. The Financial Supervisory Service (FSS), which compiled the earnings figures of the savings banks, pointed out that the business environment is expected to improve in the second half of this year.