Profits at Korean financials estimated to have surged in 2016: data

Korea’s major financial groups are likely to witness their 2016 annual profits rise from a year earlier, on profits from increased lending and reduced costs in risk management, industry data showed Monday.

According to data by financial information provider FnGuide, combined annual net profits at Shinhan Financial Group, KB Financial Group, Hana Financial Group and Woori Bank are estimated to have hit 7.37 trillion won ($6.27 billion) in 2016, up 1.33 trillion won from 6.39 trillion won in 2015.

The earnings are notable especially when the four financial firms had to spend more than 1 trillion won in retirement funds to about 4,000 employees who applied for an early retirement program in the fourth quarter last year.

Hana Financial Group on Tuesday announced that its net profit surged 47.9 percent to 1.34 trillion won in 2016, the largest volume since the group acquired the formerly Korea Exchange Bank in 2012.

The rise in earnings was attributed to increased deposits, SME loans and household lending at its flagship KEB Hana Bank. At the bank, deposits, SME loans and household loans rose 15.1 percent, 6.4 percent and 8.4 percent in 2016, respectively, from a year earlier.

The three others are to announce their earnings results on Feb. 8-9.

Shinhan Financial, the largest financial group by assets, is expected to hit 2.55 trillion won in net profit, a 7.6 percent gain from a year earlier, according to the market consensus estimated by FnGuide.

KB Financial is expected to see its net profit rise 31.1 percent to hit 2.22 trillion won in 2016, the data showed, apparently boosted by virtual profits made from KB Financial’s cheap acquisition of Hyundai Securities last year. An 800 billion won profit from the acquisition can offset about 860 billion won in retirement funds for 2,800 early retirees, local news reports said.

Woori Bank, which is to see its privatization finalized on Tuesday, is estimated to have its net income rise more than 20 percent on-year to 1.25 trillion won in 2016, FnGuide’s data showed.

Meanwhile, among the seven institutional investors who bought Woori’s 29.7 percent stake from the Korea Deposit Insurance Corp., IMM Private Equity will make the final payment to the insurer on Tuesday, the Financial Services Commission said.

By Kim Yoon-mi (yoonmi@heraldcorp.com)