BOK chief says more uncertainty in global financial market

South Korea's central bank head forecast additional difficulties for the economy Friday, saying uncertainties in the global financial market were increasing more than ever before.

"Since the beginning of the year, uncertainties in the global financial market have increased due to the instability in the Chinese market, additional drops in global oil prices and the introduction of a negative interest rate by the Bank of Japan," Bank of Korea Gov. Lee Ju-yeol said in a meeting with top financial officials and bankers. He also said North Korea-related geopolitical risks have further heightened such uncertainties.

"Under such conditions, the business environment for local banks is expected to worsen," he added, noting the combined net profit of local lenders has nearly halved to 3.5 trillion won ($2.85 billion) in 2015 from 6 trillion won in the previous year.

Still, the top central banker said the difficulties in the global market will not cause serious problems here, insisting local lenders are more than capable of absorbing external shocks.

"And thus, financial services for households and companies are generally expected to work properly," Lee said at the meeting, according to excerpts of his opening remarks released by the BOK.

The BOK chief stressed a need for local banks to intensify their risk-management efforts.

"As uncertainties in local and global financial markets heightened recently, a need to manage risks is becoming more important than ever," he added.

Friday's meeting was attended by the heads of seven major local banks, including Kookmin Bank and the state-run Korea Development Bank. (Yonhap)