S. Korea’s top 5 financial groups achieve record half-year profit

[Photo by Yonhap]

South Korea’s five major financial groups have reported a record half-year net profit exceeding 11 trillion won ($7.96 billion), driven by unprecedented interest income surpassing 25 trillion won primarily from banks. Additionally, non-interest income has increased and the profitability of non-banking sectors has improved, contributing to these strong results.

As of July 26, the combined net profit for the first half of the year for Shinhan, Hana, NH Nonghyup, KB, and Woori financial groups was 11.10 trillion won, up 2 percent from 10.88 trillion won recorded a year ago, which is a new half-year record.

Shinhan Financial Group announced a net profit of 1.42 trillion won for the second quarter, marking the highest quarterly profit since the third quarter of 2022. For the first half of the year, Shinhan’s net profit rose by 7.9 percent to 2.74 trillion won.

KB Financial Group led with a half-year net profit of 2.78 trillion won.

Hana Financial Group also reported strong results, with a net profit of 1.03 trillion won in the second quarter and a 2.4 percent increase in first-half net profit to 2.06 trillion won, marking the second consecutive year of surpassing 2 trillion won and setting a new record.

NH Nonghyup Financial Group achieved its highest half-year net profit at 1.75 trillion won, with a quarterly record of 1.1 trillion won in the second quarter.

The record profits are largely attributed to increased interest income due to high interest rates and expanded household and corporate loans. The five financial groups’ first-half interest income totaled 25.11 trillion won, up 4.4 percent from the same period last year.

Non-interest income growth and improved profitability in non-banking sectors also contributed to the strong performance. Shinhan Financial attributed its robust results to increased fees from credit cards and investment banking, with overseas operations contributing 4.1 trillion won in net profit, accounting for 28.8 percent of the group’s total, a 32.4 percent increase from the previous year.

Hana Financial reported a 12.6 percent increase in first-half fee income to 1.03 trillion won, exceeding market expectations thanks to increased fees from corporate finance, retirement pensions, and credit cards.

NH Nonghyup’s non-banking subsidiaries also grew, with their contribution to overall profit increasing to 38.3 percent in the first half, up 1.4 percentage points from the previous year. NH Investment & Securities and Nonghyup Life Insurance saw its first-half net profits increase by around 15 percent, reaching 422.7 billion won and 163.9 billion won, respectively.

Building on their solid performance, the top five financial groups are enhancing shareholder returns. Hana Financial’s board resolved to pay a quarterly dividend of 600 won per share and completed its 300 billion won share buyback plan ahead of schedule, with plans to retire the repurchased shares in August. It will also announce plans to enhance corporate value in the second half of the year. KB Financial will execute a 720 billion won share buyback and retirement plan this year. Woori Financial Group has unveiled a value-up program aiming for a “50 percent total shareholder return ratio.”