KB Financial Group, 3 others beat first-quarter earnings estimates

KB Financial Group Inc. building in Seoul [Courtesy of KB Financial Group]

KB Financial Group Inc. and three other top financial holdings companies in South Korea achieved strong net profit growth in the first quarter, beating market expectations helped by robust business in non-banking areas.

KB Financial Group regained its position as the industry leader thanks to non-interest earnings, which were driven by insurance and securities subsidiaries. The holding firm Thursday announced that it recorded a net profit of nearly 1.5 trillion won ($1.12 billion) in the January-March period, up 2.5 percent from a year earlier.

Shinhan Financial Group Co. reported net profit of 1.39 trillion won, a decline of 0.9 percent from a year ago, and Hana Financial Group Inc. 1.1 trillion won, an increase of 22.1 percent.

Earlier, Woori Financial Group said it posted a net profit of 911.3 billion won for the first quarter, up 8.6 percent from a year ago.

Combined, net profit at these four major financial holding companies amounted to about 4.9 trillion won in the first quarter, a 6.4 percent increase compared to the same period last year. This exceeded market estimates of 4.54 trillion won, down 1.4 percent from the previous year.

The financial holding companies set aside a total of 1.73 trillion won in loan provisions in the quarter, up by 140.8 percent from a year ago.

Despite the sharp increase in provisions, the holding companies performed well mainly due to their improvement in non-interest earnings from bond and foreign exchange tradings. These four companies recorded a total of 3.72 trillion won in non-interest earnings in the first quarter, up 34.5 percent from a year ago.

KB Securities Co. and KB Insurance Co. under KB Financial Group posted net income of 140.6 billion won and 253.8 billion won, up 23.0 percent and 25.7 percent, respectively, from the same period last year. KB Kookmin Bank Co. led the industry in attracting low-cost deposits, which contributed to the financial group’s strong performance.

Shinhan Financial Group’s net interest margin fell by 0.08 percentage points compared to the previous quarter. A decline in interest earnings and a significant increase in new provisions led to a decrease in net profit from a year ago.

In contrast, Hana Financial Group responded appropriately to interest rate volatility, while generating strong profits in pension fund business. In particular, the holding company posted 480.1 billion won in valuation gains through foreign exchange and securities trading.