KB maintains leading bank status, Shinhan joins '4 trillion won club'

By Lee Min-hyung

KB Financial Group has once again maintained its leading bank status in terms of 2021 earnings, with other financial firms chalking up record net profits amid expanded interest margins driven by the Bank of Korea's (BOK) rate hikes.

The four major financial holding firms ― KB, Shinhan, Hana and Woori ― said their combined net profit set a new high of more than 14 trillion won last year. They took advantage of the rise in their net interest margin (NIM), a key barometer indicating banks' profitability, after the BOK started increasing the key rate in August.

With banks generating better-than-expected loan-deposit margins throughout 2021, the so-called big four financial firms here have been able to extend their winning streaks.

People pass by automated teller machines of the major financial holdings firms in Seoul in this file photo. Yonhap

KB Financial Group reported 4.41 trillion won in net profit last year, up 27.6 percent from the previous year. Of particular note was the expansion of its non-banking profit during the same period. According to the company, net profits from KB's non-banking subsidiaries accounted for 42.6 percent of the group's total earnings. KB Securities grabbed investors' attention by achieving 40 percent growth in its net profit during the period.

Shinhan Financial Group also achieved major earnings growth with a net profit of 4.02 trillion won last year, up 17.7 percent from a year earlier. This was the first time that the company achieved an annual net profit of more than 4 trillion won.

Despite the robust performance, Shinhan failed to win back the leading status from KB last year. Shinhan was the most profitable financial holding firm for two years from 2018. However, with KB regaining the title from 2020, Shinhan came in second for two consecutive years.

From left are KB Financial Group Chairman Yoon Jong-kyoo, Shinhan Financial Group Chairman Cho Yong-byoung, Hanan Financial Group Chairman Kim Jung-tai and Woori Financial Group Chairman Son Tae-seung. Yonhap

Hana Financial Group and Woori Financial Group also succeeded in achieving astonishing earnings growth. Hana reaped a net profit of 3.53 trillion won in 2021, up 33.7 percent from a year earlier.

Woori Financial Group in particular, has made headlines after reporting an eye-catching growth of 98 percent in its net profit during the same period. The company reaped a net profit of 2.59 trillion won last year, the largest in its history, on the solid earnings growth of its cash-cow banking arm. Woori Bank achieved major growth of 74.1 percent in its net profit during the same period.

Woori's earnings growth is expected to pick up more steam this year after the company was completely privatized late last year, which will enable the firm's top management to engage in swifter decision-making.

“We are going to do the utmost to make a new leap forward this year by expanding our business portfolios with the ongoing growth momentum after the privatization,” Woori Financial Group Chairman Son Tae-seung said in a recent regulatory filing.

A general consensus is that the financial firms will be able to increase their earnings throughout this year when the U.S. Fed and the BOK are scheduled to raise key rates for at least a couple more times.

“Financial firms will continue to enjoy their heyday, as the Korean central bank is widely expected to increase the benchmark rate further in line with the Fed's movement for monetary tightening,” an official from the financial industry said.