Korea’s top 4 financial holding companies to post strong Q2 earnings

[Photo by each company]

South Korea’s major financial holding companies are projected to report strong second-quarter earnings, paving the way for record annual performances.

According to financial information firm FnGuide Inc. on Friday, the combined net profit of the country’s four major financial holding companies is expected at 4.64 trillion won ($3.34 billion) for the April-June period, up by nearly 10 percent from 4.38 trillion won in the same period last year.

The four financial groups are KB, Shinhan, Hana, and Woori.

This increase is attributed to each financial company’s efforts to achieve annual performance targets after reflecting losses from Hong Kong H index-linked securities (ELS) in their first-quarter results.

By company, Shinhan, Hana, and Woori are expected to post higher net profits in the second quarter of this year from the same period a year ago.

KB Financial‘s net profit is projected to decline 3.1 percent to 1.46 trillion won in the second quarter this year from 1.5 trillion won during the same period a year ago when its performance was exceptionally strong.

Shinhan Financial is estimated to see its net profit surge by 4.2 percent to 1.32 trillion won, and Hana Financial by 7.7 percent to 1 trillion won during the cited period.

Woori Financial’s net profit is expected to be the lowest among the financial holding companies at 854.5 billion won. However, it is still a 28.1 percent increase from the same period a year ago, showing the highest growth rate.

Securities firms attribute the strong performance of the financial holding companies to the base effect.

“The earnings of the financial holding companies are expected to improve compared to last year, when there were significant additional provisions and burdens related to shared financial costs,” said Kim Jae-woo, an analyst at Samsung Securities Co.

The financial holding companies are projected to post record earnings for the full year.

The combined net profit of the four major financial holding companies is expected to reach 16.45 trillion won, up 9.5 percent from last year, surpassing the previous record of 15.65 trillion won in 2022.

A gradual decline in the interest rates, however, could hurt the performances of the financial groups. The expansion of real estate project financing defaults could also lead to deteriorating asset quality in the second half.

Second-quarter earnings announcements are scheduled for July.