KB Financial Group reported weak quarterly earnings beset by weak lending amid the economic slowdown.
The financial holdings giant posted a net profit of about 413 billion won in the first quarter of this year, down more than 32 percent from 608.4 billion won a year earlier, the company disclosed Friday.
It performed below the market consensus of a 30 percent decrease in profit at around 420 billion won.
Its sales reached 6.2 trillion won, down about 10 percent from 6.9 trillion won in the same period.
KB Financial had an operating profit of 533 billion won in the first three months of this year, down 34 percent from 809 billion won a year ago.
Analysts attributed its poor fiscal results to the weak economy and low interest rates which have led KB Financial to set aside reserves for bad loans and driven down its core profitability measured by interest margin.
Meanwhile, Hana Financial Group’s net profit dropped about 78 percent to 289.8 billion won. It had sales of 7.4 trillion won in the first quarter from 7.3 trillion won a year ago.
It had an operating profit of 367 billion won, down 74 percent from 1.4 trillion won.
The fall is also attributable to a decreased interest margin on low rates, it said.
Hana may face a possible legal battle with the Bank of Korea over the sale price of the central bank’s 6 percent stake in Korea Exchange Bank, acquired by Hana from the U.S. buyout fund Lone Star last year, as the BOK asked a court of law for an evaluation so that it can demand a higher price.
Hana Financial has set forth two options before KEB shareholders that they can exit their holdings via share swaps or appraisal rights.
Since the central bank, by law, cannot own shares in private companies, in this case, Hana Financial, the BOK planned to unload its stake in KEB by selling it to Hana Financial at 7,383 won per share, or about 292 billion won in total.
This decision will result in a loss of over 100 billion won for the central bank on its books from the share sale to Hana, given that it has invested some 395 billion won in KEB since 1967.
The other two financial holdings giants ― Shinhan and Woori ― are expected to disclose their first-quarter earnings next week.
The four major financial companies are projected to post a combined net profit of 1.8 trillion won in the first quarter of 2013, down almost 50 percent from 3.5 trillion won a year earlier, according to securities information service provider FN Guide.
By Park Hyong-ki (
hkp@heraldcorp.com)
