Korea’s top financial groups head for record first-half earnings as KB and Shinhan beat estimates
KB Financial and Shinhan Financial posted record quarterly profits on stronger securities and noninterest income, with Hana and Woori also expected to deliver solid results and higher shareholder returns.
ATMs operated by major commercial banks are seen in Seoul on Feb. 3, 2025.NEWS1
Four of Korea's largest financial holding companies are on track to post record first-half earnings this year.
KB Financial Group and Shinhan Financial Group, which released their second-quarter results on Thursday, both set new quarterly profit records for a second consecutive quarter after posting all-time highs in the first quarter.
KB Financial reported first-half net profit of 3.88 trillion won ($2.6 billion), up 13.1 percent from a year earlier.
It posted a consensus-beating second-quarter net profit of 1.99 trillion won, exceeding market expectations by 4.1 percent. Interest income, led by its banking business, fell 5.7 percent on-year to 3.14 trillion won, but was more than offset by a 38.2 percent surge in noninterest income from nonbank subsidiaries such as securities and insurance.
KB Financial's securities subsidiary was the biggest contributor to the strong quarterly performance. KB Securities posted second-quarter net profit of 448.5 billion won, up 182.1 percent from a year earlier, as a buoyant stock market boosted fee income.
KB Securities accounted for 22.5 percent of the group's quarterly net profit, up from 18.4 percent in the previous quarter. Net profit also rose 15.1 percent at KB Kookmin Card and 13.7 percent at KB Insurance.
KB Financial Group headquarters in western SeoulKB FINANCIAL GROUP
Banking business, however, was relatively weak. KB Kookmin Bank's second-quarter net profit fell 3.2 percent on-year to 1.12 trillion won.
The decline reflected intensifying competition for corporate lending following tighter regulations on household loans, as well as higher funding costs as banks secured liquidity ahead of expected interest rate increases in the second half of the year.
As a result, the group's net interest margin (NIM) edged down 0.02 percentage points from a year earlier to 1.94 percent. NIM is the spread between interest income and funding costs.
Shinhan Financial also delivered record earnings.
The group posted first-half net profit of 3.44 trillion won, up 13.3 percent from a year earlier. Second-quarter net profit reached 1.82 trillion won, beating market expectations by 7.9 percent.
Unlike KB, Shinhan recorded balanced growth in both interest and noninterest income. Second-quarter interest income rose 9.4 percent on-year to 3.13 trillion won, while noninterest income increased 14.6 percent to 1.45 trillion won.
"We expect net interest margin to improve significantly in the second half as the benchmark interest rate rises further," Kang Young-hong, chief financial officer of Shinhan Bank, said during the earnings call.
Shinhan Financial Group office in central SeoulSHINHAN FINANCIAL GROUP
Capital market subsidiaries also posted strong performances.
Shinhan Securities reported net profit of 289.3 billion won, up 91.6 percent from a year earlier. Shinhan Asset Management posted net profit of 35.3 billion won, up 153.7 percent, driven by higher revenue from exchange-traded fund (ETF) management.
"Improved noninterest income, particularly fee income from the securities business, drove the group's overall performance," a Shinhan Financial source said.
Hana Financial Group and Woori Financial Group, which are scheduled to release second-quarter earnings on Friday, are also expected to meet market expectations.
Hana Financial is projected to post second-quarter net profit of 1.26 trillion won, up 6.3 percent from a year earlier, while Woori Financial is expected to report 965.7 billion won, up 2.8 percent, according to analyst consensus compiled by market tracker FnGuide.
The record earnings are also expected to translate into generous shareholder returns.
KB Financial's board approved a 700 billion won share buyback and cancellation program for the second half of the year, along with a quarterly cash dividend of 1,155 won per share. The group is expected to return a total of 3.7 trillion won to shareholders this year.
Shinhan Financial also approved a 700 billion won share buyback and cancellation plan and a quarterly cash dividend of 740 won per share. The group plans to return more than 2.8 trillion won to shareholders this year.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
