Oct. 30, 2009 (The Korea Times) -- By Yoon Ja-young
Staff Reporter
Banks enjoyed an earnings surprise for the third quarter amid the stabilizing financial market and the economic recovery. A complete turnaround, however, will still take time, according to Seoul analysts.
Woori Financial Group on Thursday filed 483.8 billion won in net profit for the third quarter ¡ª more than triple the earnings it recorded a year ago. Its net profit so far this year totaled 869.2 billion won as of September.
Woori cited a higher net interest margin, falling delinquency ratio and cost cuts as the main reasons for the earnings surprise.
"The net interest margin rose to 1.94 percent from 1.75 percent the previous quarter, increasing interest income by 7.5 percent," Woori said in a press release.
KB Financial Group also saw its third-quarter earnings soar 57.9 percent to 173.7 billion won from the previous quarter. Its earnings so far this year totaled 522 billion won as of September.
KB attributed it to a recovery in its net interest margin and an increase in non-interest income.
Its interest income totaled 1.5 trillion won for the third quarter, up 2 percent from the previous quarter, as the net interest margin widened.
Non-interest income marked 148.9 billion won for the third quarter, surging 259.7 percent from the previous quarter.
Its biggest subsidiary, Kookmin Bank, had a net interest margin of 2.2 percent, up 0.4 percentage points from the previous quarter.
Hana Financial posted a 240-billion-won net profit for the third quarter in its quarterly filing last week. It is a 22.1-percent increase from the second quarter. The bank cited the net interest margin increase and commissions from fund sales as the reasons.
Korea Exchange Bank and Shinhan Financial, which are yet to file third-quarter earnings, are expected to post good performances as well. An official at Korea Exchange Bank said it expects net profit of over 400 billion won, and Shinhan said its third quarter was better than the previous one.
However, this does not mean that banks have made a full turnaround.
"I think it will get better gradually," said Hong Heon-pyo, an analyst at KTB Investment & Securities. He said it was doubtful the banks will fare well after the government absorbs liquidity.
"Bank performances tend to move in line with the cycle of macro-economy. It is too early to talk about a rebound," he said.
Meritz Securities' analyst Lim Il-sung said the fourth quarter is likely to be flat. "It's a matter of economy. When the key rate is raised, banks will be facing the burden of piling up reserves, and the recovery in margin will slow down," he said.
