Bank Holding Companies
Connected current net income for bank holding companies dropped by 62.3% in 1H 2013.
The Net Interest Margin (NIM) of holding companies also declined. KDB Financial Group and NongHyup Financial Group recorded current net losses in 1H 2013.
The Financial Supervisory Service announced on September 16 that connected current net income for bank holding companies was at 2.3134 trillion won (US$2.1491 billion) in 1H 2013, 3.8201 trillion won (US$3.5531 billion) lower than the same period last year.
The Financial Supervisory Service explained that this is because an increase in non-performing loans led to a 1.2 trillion won (US$1.116 billion) increase in the allowance for bad loans over the same period last year. Stock valuation and a gain on the disposal of marketable securities decreased by 1.300 trillion won (US$1.2077 billion).
Furthermore, a decrease in NIM led interest income to fall by approximately 500 billion won (US$464.5 million).
NIM in Korean banks fell from 2.19% in 1Q 2012 to 1.95% in 1Q 2013, and again to 1.88% in 2Q 2013.
By business sector, the highest contribution of profit came from banks, which accounted for 58.7%. It was followed by non-banks at 28.0%, financial investments at 6.8%, and insurance at 6.5%.
By bank holding company, Shinhan Financial Group had the highest connected current net income at 1.0722 trillion won (US$996.03 million), followed by KB Financial Group at 601.8 billion won (US$559.74 million), and Hana Financial Group at 335 billion won (US$311 million).
Excluding Citigroup, all nine companies saw lowered current net income compared to the same period last year.
In particular, KDB Financial Group saw current net losses of 433.6 billion won (US$403.3 million) and NongHyup Financial Group saw current net losses of 88.4 billion won (US$82.1 million).
The main reasons for their loss are expenses incurred through allowance for bad debt in the process of credit offerings regarding major corporations such as STX, as well as impairment losses on marketable securities.
By the end of June there were a total of ten bank holding companies and 279 companies that were affiliated with the holding company, including 51 banks, 36 financial investment companies, and 6 insurance companies.
At June-end connected net assets for bank holding companies was at 1.9153 quadrillion won (US$1.7793 trillion), 71.4 trillion won (US$66.3 billion, 3.9%) higher than the 1.8439 quadrillion won (US$1.7129 trillion) recorded at the end of last year.
By bank holding company, Woori Financial Group was the largest at 336.7 trillion won (US$312.8 billion), followed by Shinhan Financial Group at 319.3 trillion won (US$297.0 billion), Hana Financial Group at 302.5 trillion won (US$281.0 billion), and KB Financial Group at 293.6 trillion won (US$272.7 billion).