SEOUL– Savings banks in South Korea saw their combined net profit decline 15.1 percent on-year in the first half despite increased interest income as they set aside more loan loss reserves amid heightened economic uncertainty, data showed Monday.
The combined net income of 79 savings banks stood at 899.1 billion won (US$649.2 million) in the January-June period, down from a net profit of 1.06 trillion won the previous year, according to the preliminary data from the Financial Supervisory Service (FSS).
The decline came as they set aside loan loss reserves more than they earned from customers’ interest payment, which has been on the rise in line with the central bank’s rate hikes to tame inflation.
Their loan loss reserves expanded 491 billion won on-year in the first half, while their interest income grew 481 billion won over the same period, the data showed.
During the first half of this year, their total lending stood at 114.5 trillion won, up 13.9 percent from six months earlier. Loans to households and businesses expanded 4.7 percent and 20.2 percent, respectively.
Those savings banks’ total assets were valued at 133.4 trillion won at the end of June, up 12.8 percent from six months earlier, while their debt also increased 13.5 percent over the same period to 119.9 trillion won. Those banks’ combined equity also rose 7 percent to 13.5 trillion won, the data showed.
Their loan delinquency ratio came to 2.6 percent as of end-June, up 0.1 percentage point from end-December.
Their average capital adequacy ratio reached 12.88 percent at the end of June, down 0.43 percentage point from six months earlier, the data showed.
It is still higher than a ratio of 8 percent recommended by the Bank for International Settlements, an international organization of central banks.
Source: Yonhap News Agency