Korean banks’ overseas net profits double in 2011: FSS

The combined net profit of Korean banks’ overseas sales operations nearly doubled last year, as their profitability recovered to pre-crisis levels, the nation’s top financial regulator said Wednesday.

The total net profit of 93 overseas units run by 11 banks last year amounted to $721.6 million, up 95.5 percent from $369.1 million in 2010, thanks to a sharp drop in expenses from bad debt and a turnaround in securities-related profits.

Profits had gone down to $312 million in 2008 and $286 million in 2009 amid the global financial crisis.

The branches’ bad debt expenses shrank 68.4 percent to $112.1 million from $354.8 million in 2010, the Financial Supervisory Service said, adding that a positive turnaround in securities-related profits and gains in interest income also contributed to better earnings.

The overseas operations’ combined interest income surged 4.3 percent year-on-year to $118 billion due to reduced borrowing costs following a LIBOR rate cut in the first half of last year. Securities-related profits reached $153.3 million from minus $116.0 million in 2010.

The overseas units’ return on assets gained 0.58 percentage points from the previous year to 1.19 percent last year on increased net profits.

The combined assets of the overseas branches grew 13.3 percent from a year ago to $64 billion late last year, or about 3.7 percent of the Korean banks’ total assets. They accounted for 28 percent of the banks’ assets denominated in foreign currency.

The growth of the overseas arms’ assets, which had slowed down during the global financial meltdown, also recovered to pre-crisis levels last year.

By Kim So-hyun
(sophie@heraldcorp.com)