South Korea’s Big Four Financial Groups Post Nearly 5 Trillion Won in Q1 Profit

KB, Shinhan, Hana and Woori — South Korea’s four largest financial holding companies — posted nearly 5 trillion won in net profit in the first quarter. Despite regulators’ controls on total household lending, wider lending-deposit spreads as market rates rose and stronger brokerage fee income supported results. Still, rising won-dollar exchange rates and growing Middle East-related risks are adding uncertainty, analysts said. 

According to the financial sector on Thursday, the four groups’ combined first-quarter net profit totaled 5.3288 trillion won, up 8.11% from 4.9289 trillion won a year earlier. 

KB Financial Group recorded the biggest gain, with first-quarter net profit rising 11.5% to 1.8924 trillion won. Shinhan Financial Group posted 1.6226 trillion won, up 9%. Hana Financial Group earned 1.2100 trillion won, up 7.3%. Woori Financial Group was the only one to decline, with net profit down 2.09% to 603.8 billion won. 

Interest income, banks’ core revenue source, also increased. The four groups’ combined interest income rose 5.31% to 11.2074 trillion won from 10.6419 trillion won a year earlier. 

The increase appears to reflect wider net interest margins as banks raised loan rates in line with higher market rates. This year, the top end of fixed-rate mortgage rates at major commercial banks moved above 7% for the first time in three years and five months. COFIX, a benchmark for floating-rate mortgages, turned higher in February. 

Noninterest income was another key driver. Combined noninterest income jumped 34% to 3.8773 trillion won from 2.8935 trillion won in the first quarter of last year, helped by improved securities-related fee income amid a stronger domestic stock market. 

Even as most groups started the year with strong earnings, uncertainty around the operating environment is growing. Middle East-related risks are weighing on exchange rates, interest rates and capital ratios. 

Common equity Tier 1 (CET1) ratios edged lower in the first quarter at several groups. KB Financial’s CET1 ratio fell 0.19 percentage points to 13.63%, and Shinhan’s slipped 0.16 points to 13.19%. Hana’s also declined by 0.15 points. Woori was the only one to rise, up 0.7 points to 13.6%. 

At the same time, delinquency rates on corporate loans expanded under a push for more “productive finance,” adding to asset-quality pressure. Banks are facing the task of sustaining earnings while managing credit quality and provisioning burdens.