Solid bank profits expected in Q3

KB Financial Group  projected to record about 670 billion won in net profits: analysts


It is estimated that four major financial groups and their banking units will secure robust performance during the third quarter, according to analysis by local securities firms.

Securities firms such as Kyobo, Hyundai and Mirae Asset analyzed that Korean banks were not significantly affected by the eurozone debt crisis.

“Despite negative factors including fiscal woes among several advanced countries and the global economic slowdown, current stock prices in the banking sector are very attractive,” Mirae Asset Securities said.

The broker firm forecast that local banks will maintain brisk fundamentals as long as there is no extreme global economic downturn.

Kyobo Securities suggested its “buy” opinion for bank stocks, saying their third-quarter performance is projected to be favorable with few negative factors.

“Even if Greece announces a sovereign default, the impact on the local market will not be fatal as the factor has already been reflected,” it said. “But the issue is the coming situation of Spain and Italy.”

According to the brokerage industry, it is estimated that financial groups and banks’ third-quarter net profit will inch down compared to the second quarter when they saw huge gains from sales of Hyundai Engineering & Construction as former creditors.

KB Financial Group is projected to record about 670 billion won ($582 million) in net profits.

Though the group saw its profit reach 817 billion won, the figure involved 204.2 billion won gained by Kookmin Bank’s Hyundai E&C sale.

Analysts forecast that Shinhan Financial reaped about 800 billion won in net profit in the third quarter, down from 964.8 billion won from a quarter earlier.

But considering Hyundai E&C’s sale gains totaling 267 billion won, Shinhan’s third-quarter performance may surpass that of the second quarter.

Woori Financial and Hana Financial are estimated to record about 500 billion won and 330 billion won in net profits.

However, there is uncertainty over their fourth-quarter performances amid unfavorable external factors and financial regulators’ strong instruction to curb household lending.

A Hanwha Securities analyst said banks could negatively be affected by the woes from the fourth quarter if the situation lingers.

Further, bank and credit card units of the financial groups are suffering from stern regulations of the Financial Supervisory Service.

Amid snowballing household debt, the FSS has been ordering banks and credit card firms not to exceed regulatory guidelines.

Four major banks ― Kookmin, Woori, Shinhan and Hana ― saw their household loans stand at 276.6 trillion won as of Sept. 15, down 407.3 billion won from the end of last month.

By Kim Yon-se (kys@heraldcorp.com)