JB, DGB bounce back with non-interest income

BNK suffers from falling profits, labor dispute

By Park Jae-hyuk

JB and DGB financial groups showed significant improvements in their third-quarter results thanks to non-interest income from their non-banking subsidiaries, despite the ongoing spread of the coronavirus here.

In contrast, market leader BNK Financial Group failed to overcome the impact of the COVID-19 pandemic because operations of its key subsidiary Busan Bank remained sluggish again last quarter.

Market analysts expect the three groups will focus more on enhancing their non-banking units until the end of the year considering the groups' banks have performed poorly due to the economic recession and falling interest rates.

According to regulatory filings by the three groups, Friday, DGB posted the largest growth in third-quarter earnings.

The Daegu-headquartered group's net income was 103.5 billion won ($91 million), up 29 percent from the same period the previous year. Its accumulated net profit during the first three quarters was 276.3 billion won, a 1.5 percent rise.

“Despite the COVID-19-led economic recession and declining interest rates, we obtained satisfactory results due to our enhanced non-banking subsidiaries, such as HI Investment & Securities and DGB Capital,” a group official said.

JB earned 117.7 billion won during the third quarter, up 24 percent year-on-year. The North Jeolla Province-based group's accumulated profit during the first three quarters was 298.1 billion won, up 1.3 percent from last year.

After the announcement of its earnings, JB Chairman Kim Ki-hong said his company will seek to acquire more businesses in non-banking, such as brokerages and asset management firms.

“It is true that we have very few non-banking subsidiaries, and there is no doubt that we need affiliates for the capital market,” he said during a conference call. “We could not afford to carry out any acquisitions, but now our business is on track, so I think it is reasonable to pursue expansion from now on.”

BNK was the only provincial banking group that suffered an earnings decline.

The Busan-headquartered group posted 147.3 billion won in its quarterly net profit, down 20 percent from a year earlier. Its accumulated earnings during the first three quarters were 447.4 billion won, a 15.5 percent decline year-on-year.

Its deteriorating profit was mainly attributed to Busan Bank whose year-on-year accumulated profit decreased 27.6 percent to 257.7 billion won, following increasing allowance for bad debt.

“We will endeavor to improve our financial stability to brace for a possible economic downturn in the future,” a BNK official said.

The group is also facing a labor dispute after BNK Chairman Kim Ji-wan hinted at a merger between Busan Bank and Kyongnam Bank during a press conference, Oct. 21.

Earlier this week, the Korean Financial Industry Union urged the group to stop its attempts to push for the merger, saying it could cause conflicts between employees in Busan, Ulsan and South Gyeongsang Province.