JP Morgan Chase, ANZ post dip in profit

By Kang Seung-woo

The Seoul branches of high-profile foreign banks including JP Morgan Chase and Australia and New Zealand (ANZ) Banking Group saw their net profits drop in 2010 from a year ago due to a decline in income from currency trading, the banking industry said Monday.

According to the Korea Federation of Banks (KFB), JP Morgan Chase Bank Seoul Branch, the unit of U.S.-based JP Morgan Chase, reported a net profit of 156.5 billion won ($139.12 million) last year, down 31.6 percent from a year ago. The lender raked in a record-high 431.3 billion won in 2008, but since then, it has registered a decline in earnings for the second straight year.

The Seoul arm of Australia-based ANZ, which attempted to acquire the Korea Exchange Bank, also saw its net profits fall 76.3 percent year-on-year to 4.6 billion won.

The Bank of Nova Scotia, headquartered in Canada, also dipped, tallying a 27.5 percent drop in net income to 14.3 billion won in profit from its operations, while the branch of the Indian Overseas Bank from India saw its profit drop 15.1 percent to 500 million won.

The units of Japan-based lenders also suffered significant falls in earnings in 2010 from the previous year.

The Bank of Tokyo-Mitsubishi UFJ’s branch in Seoul saw its net income sink 18.6 percent to 127.3 billion won last year and the local arms of Mizuho Bank and Sumitomo Mitsui Banking Corp. sank 26.3 percent and 18.6 percent, respectively, to 72.7 billion won and 65.1 billion won in net earnings.

The KFB said that the decline in their profits was caused by reduced volatility in the foreign currency and derivatives markets, the main profit source of foreign lenders.

The Korean won’s appreciation last year, which drove down the value of local branches’ foreign currency-denominated assets, was also responsible for the smaller net profits, it said.

The local currency averaged 1,156 won to the U.S. greenback in 2010, compared with 1,276 won in 2009.

“When the financial market fluctuated during the global financial crisis, the branches of foreign lenders made profits via currency trading, but the market stabilization last year turned them around,” said an official of a foreign bank’s local unit.