Seoul – South Korean banks have experienced a significant surge in net profit in the third quarter, driven largely by an increase in interest income.
According to Yonhap News Agency, the combined net profit of 20 banks in the July-October period reached 5.4 trillion won (US$4.15 billion). This figure represents a 38.2 percent increase from the 4.2 trillion won net profit recorded in the same period last year. However, compared to the previous quarter, there was a 23.9 percent decline, equivalent to 1.6 trillion won.
The banks' interest income in the third quarter was reported at 14.8 trillion won, an increase from 14.3 trillion won a year earlier. This rise in interest income was a key factor contributing to the overall growth in profits.
Additionally, the banks' return on assets (ROA) ratio improved by 0.15 percentage points to 0.58 percent during the cited period. Their return on equity (ROE) ratio also saw a significant increase, adding 1.76 percentage points to reach 7.87 percent.
The non-interest income of these 20 banks in the July-October period was 800 billion won, in contrast to a 100 billion won loss in the same period last year. This turnaround in non-interest income further bolstered the banks' financial performance.
Loan loss expenses, which reflect the cost of potential loan defaults, also increased. The aggregate loan loss expenses for these banks amounted to 2 trillion won in the third quarter, up from 900 billion won a year earlier.
Overall, the first nine months of the year saw a 38.2 percent year-on-year surge in the banks' combined net profit, totaling 19.5 trillion won. Their interest income during this period also grew by 8.9 percent, reaching 44.2 trillion won.
This robust performance indicates a strong recovery and growth trajectory for South Korean banks amidst a dynamic economic environment.