Holding Firms’ Net Profit Up 25%

By Park Hyong-ki

Staff Reporter

Korea Investment Holdings posted the poorest earnings among four domestic financial holding companies in the first nine months to September last year, according to the Financial Supervisory Service (FSS).

Korea Investment's net profit fell by 26.8 percent to 241.8 billion won from 330.3 billion won a year ago as its non-operating gains, including equity investments, weakened during the corresponding period.

The regulatory body also said that the holding group posted the biggest fall in return on asset (ROA), the key indicator measuring profitability, as it recorded weaker net profit.

Its ROA dropped by 3.06 percentage points to 2.85 percent from the same period in 2006.

Beside Korea Investment, Woori Financial Group's ROA fell by 0.07 percentage points to 1.07 percent. Only Shinhan Financial Group and Hana Financial Group managed to improve their ROAs over the period.

However, the FSS said holding groups' ROAs were higher than those of foreign banks such as Bank of America and JPMorgan, meaning that domestic firms are financially stable. Bank of America's ROA was 1.26 percent, and JP Morgan's, 1.16 percent.

In addition, Korea Investment's profitability measured by return on equity (ROE) was the lowest among the four at 16.6 percent, following Hana, Shinhan and Woori.

The FSS said the four holding companies posted a combined net profit of 5.3 trillion won, up 24.6 percent from 4.3 trillion won a year before.

It noted that the LG Card sell-off largely contributed to the rise of the companies' net profit.

Eight commercial banks sold more than an 80.8 percent stake in LG Card for 3.9 trillion won last year.

Woori Financial posted the biggest gain in assets at 241.2 trillion won, up 13.8 percent from 2006; followed by Shinhan at 221.8 trillion won; Hana at 128.2 trillion won; and Korea Investment at 11 trillion won.

The regulatory body said the rise in assets was mainly due to their securities affiliates' expansion into the securities business amid the stock boom and their banks increasing loans to small- and medium-sized enterprises.

phk@koreatimes.co.kr