Major financial groups’ Q3 net profit up 7.8% as loans surge

(Kim Ho-young)

South Korea’s four major financial holding companies are expected to post a combined net profit of about 4.8 trillion won ($3.48 billion) in the third quarter of 2024, up 7.8 percent from a year earlier.

According to financial data provider FnGuide on Monday, the market forecast for net profit of the country’s four major financial holding companies - KB, Shinhan, Hana, Woori - totaled 4.79 trillion won in the third quarter of this year. This is an increase of about 345.1 billion won from the third quarter of 2023 and is close to the record high of 4.89 trillion won set in the third quarter of 2022.

Most of the financial holding companies are projected to see a significant increase in their net profit. KB Financial Group Inc. is expected to post a net profit of 1.50 trillion won in the third quarter of this year, up 11.9 percent from the same period a year ago, while Shinhan Financial Group Co.’s Q3 net profit is estimated to rise by 12.1 percent to 1.37 trillion won and Hana Financial Group Inc.‘s by 6.5 percent to 1.03 trillion won compared to the previous year.

However, Woori Financial Group Inc. is expected to see a net profit of 89.33 billion won during the same period, down 2.7 percent on year, becoming the only one among the four major financial groups to see a decline.

The strong performance of these financial groups is primarily due to bank profits. According to the Bank of Korea, the balance of household loans at deposit banks stood at 1,135.7 trillion won in the third quarter of 2024, up by 20.3 trillion won from 1,115.4 trillion won in the second quarter.

Household loans grew by 40.7 trillion won from January to September of 2024, with about half of that growth occurring in the third quarter. This surge was driven by expectations for rising house prices and the rush to secure loans before the government’s implementation of the second phase of debt service ratio (DSR) loan regulations in September.

The surge in loans prompted authorities to ask banks to control loan demand, and most banks responded by raising their lending markups. However, the measure appears to have only increased the profitability of banks rather than curbing demand.