Interest gains at Korea’s top financial groups account for 82% of 2022 profit

[Photo by MK DB]

South Korea’s four leading financial groups that posted record earnings last year saw their interest income account for more than 80 percent of the operating profit, suggesting that business depends excessively on interest gains.

According to multiple sources from the financial industry on Sunday, Korea’s four largest financial holding groups earned 48.4 trillion won ($37.4 billion) in combined operating profit last year, of which 82 percent, or 39.7 trillion won, was from interest profit. The figure goes up to over 90 percent when considering only the banks that are under the groups.

Non-interest profit of the four financial groups, in the meantime, reached 8.7 trillion won in 2022, down 25.3 percent from a year ago.

Interest and non-interest profit ratios at foreign financial firms are similar on business diversification through new businesses and overseas investment.

The interest profits at the Bank of America and Japan’s Sumitomo Mitsui Financial Group, for example, accounted for 52 percent each of their entire operating profits last year.

Industry insiders note that Korean financial groups face limits in leveling up their global competitiveness as they appear to be content in earning money from interests amid several benchmark rate hikes.

The financial authority plans to create a task force this week to spur competition in the financial sector and discuss improvements in business structure.