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| The headquarters of Shinhan Financial Group, left, and KB Financial Group in Seoul / Courtesy of each company |
By Anna J. Park
As both Shinhan Financial Group and KB Financial Group each recorded record-high quarterly revenues in the third quarter, the two financial giants are expected to post annual net profits exceeding the 4 trillion won ($3.39 billion) mark for the first time.
The all-time high quarterly profits are ascribed to the upward movement of key interest rates lately ― which contributes to the increase of the banks' profits ― as well as well-rounded performances by the groups' non-banking subsidiaries.
Yet in terms of cumulative net profits, KB Financial Group is way ahead of Shinhan by 200 billion won until the end of the third quarter. The gap in the cumulative net profit has widened in the third quarter, from 30 billion won previously to 200 billion won.
So far this year, Shinhan Financial Group garnered 3.55 trillion won throughout the first three quarters this year, while KB Financial Group reaped 3.77 trillion won during the same period, surpassing that of Shinhan.
KB's lead is mainly attributed to a lead in both its bank and brokerage arms' performances. KB Kookmin Bank logged a cumulative net profit of 2.2 trillion won by the third quarter, while Shinhan Bank posted 2.1 trillion won during the same year. Likewise, KB Securities kept its predominance with a cumulative net profit of 543 billion won, while Shinhan Financial Investment recorded 367 billion won throughout the first three quarters this year.
In card business subsidiaries, Shinhan Financial Group kept a lead over KB Financial Group, as Shinhan Card and Shinhan Capital together logged 747 billion won during the three quarters this year. KB Card and KB Capital posted 544 billion won during the same period.
The two financial giants' performances in the insurance sector, meanwhile, have been somewhat similar. Shinhan Life recorded a cumulative net profit of 401 billion won until the third quarter, as opposed to the 255 billion won net profit posted by KB Group's Prudential Life Insurance during the same period. But when adding the earnings by KB Insurance, KB Financial Group's insurance subsidiaries recorded better net profits than Shinhan's insurance arms did.
Despite the slight differences in the cumulative earnings, the two financial groups both proved their strengths in the solid performances of their diverse subsidiaries in both banking and non-banking sectors. And their sound performances are expected to continue throughout the next year.
"The banking industry is forecast to enjoy increased profits next year. It is expected that the sector will post a 3.8 percent year-on-year profit increase next year, give than Bank of Korea is expected to raise its key interest rate once again during the first quarter of next year," said Jeong Tae-joon, an analyst at Yuanta Securities.
Banking analysts also positively forecast the outlook for KB Financial Group in particular.
"KB Financial Group has not only been proving high and stable profitability, but also showing strengthened digital competitiveness in their mobile app," explained Eun Kyung-wan, an analyst at Meritz Securities, adding that the group is expected to post an annual net profit of 4.4 trillion won, followed by next year's forecasted annual net profit of 4.6 trillion won.
