By Kim Jae-won
Staff Reporter
Shinhan Financial Group and Korea Exchange Bank (KEB) reported huge net profits in the third quarter on the back of improvements in profitability and asset quality in line with an economic recovery.
Shinhan, the nation's second-largest financial holding company, said Tuesday that its net profit soared to 491 billion won for the third quarter, an 11.7 percent increase from the previous quarter, when it recorded 439 billion won.
The result was largely due to the performance of Shinhan Bank, which saw its net profit spike to 288 billion won for the period, up 43 percent from a quarter ago..
Other subsidiaries, such as Shinhan Card, Shinhan Life Insurance, and Shinhan Capital also saw their profit improve, to 247 billion won, 51 billion won and 14 billion won, respectively, during the same period.
The main driver for Shinhan's success was an improvement in it net interest margin (NIM), a barometer of profitability.
``The net interest margin recovered to 3 percent as a temporary decline of margin is gone. We think the trend will continue in the fourth quarter,'' a Shinhan executive said.
KEB reported net income of 422 billion won for the third quarter, up 77.3 percent from the previous quarter.
``The robust performance was led by a rebound in our net interest margin, lower credit costs, improving asset quality, disciplined balance sheet management and strong capital position, a KEB manager said.
Total income, which is the sum of net interest income, fees, commissions and other non-interest income, in the third quarter came to 658 billion won, compared to 584.6 billion won in the second quarter, an increase of 73.4 billion won or 12.6 percent.
The rebound in NIM was the primary driver. As higher cost deposits were re-priced at lower rates, the margin rose to 2.49 percent in the third quarter from 2.17 percent in the second.