By Park Hyong-ki
Staff Reporter
Banks saw interest income growth slow but earnings from fees and non-interest income surge in the nine months to September.
Eighteen commercial and state-owned banks' earnings jumped 14 percent to 13.1 trillion won ($14 billiion) in the January-September period from a year earlier on one-off stock investment gains, the Financial Supervisory Service (FSS) said.
Excluding the lenders' combined post-tax profits of 3.2 trillion won from selling stakes in top credit card firm LG Card and general trading company SK Networks, earnings dropped 6.6 percent to 9.9 trillion won, the FSS said.
"Despite increased earnings, key indicators on lenders' capability to generate revenues are falling," it said.
While their combined interest income rose a mere 4.6 percent on-year to 22.9 trillion won, non-interest income surged 75.6 percent to 9.4 trillion won. The hike in non-interest income is derived from a 14 percent increase in fee incomes to 3.3 trillion won, the FSS said.
Without one-off gains, their return on assets (ROA), a measure of profitability, deteriorated to 0.98 percent in September from 1.2 percent a year earlier. Including the profits, their ROA remained flat at 1.3 percent, it said.
Lenders' NIM declined to 2.44 percent in the nine-month period from 2.64 percent last year and 2.81 percent in 2005.
NIM, which gauges profitability in interest income, has narrowed since banks had to resort to costly funding sources like certificate of deposits and bonds as deposits at lenders plunged while those at non-banking financial institutions jumped, it said.