South Korean banks’ net income down 11% in H1 

Interest income grew but net interest margin (NIM) dipped. 

South Korea’s domestic banks saw their net income fall 11% year-on-year in the first half of 2024, hit by lower non-interest income.

Net income was KRW12.6t in H1, a decline of KRW1.5t compared to H1 2023, preliminary data from the Financial Supervisory Service (FSS) showed.

Regional and internet-only banks grew their net income to KRW0.1t and KRW0.17t, respectively. In contrast, specialized banks’ net income fell KRW1.6t over the same period.

Decline was due to a higher net income base in H1 2023, set by shipbuilder Hanhwa Ocean’s normalization last year. This resulted in H1 2024 net income coming in lower, the FSS said.

Impairment losses set for investments in Hanhwa Ocean also impacted the non-operating income metrics of H1 2024.

Domestic banks’ non-operating income logged a -KRW1.4t in H1 2024, down KRW2.3t from KRW1t.

“In the H1 2023, non-operating income increased mainly due to a reversal of impairment losses in relation to investments in Hanwha Ocean. By contrast, in the H1 2024, provisions for equity linked securities (ELS) were accumulated, and this decreased non-operating income,” the FSS said in its bank earnings report for H1 2024.

Interest income grew to KRW29.8t, a 4.1% increase from H1 2023 levels.

Net interest margin shrank 0.06 percentage point, which resulted in a slower pace of interest income growth.

Loan loss expenses declined 15.9% to KRW2.6t in H1 from KRW3.1t in end-2023. 

“The specialized banks reversed an allowance for doubtful accounts regarding Hanwha Ocean in the first half of 2023,” the FSS said.