Lenders see combined profit reach 12 trillion won, up 29.2% from a year beforeKorean banks posted a robust combined profit last year on the back of their record-high earnings from service charges.
According to the Financial Supervisory Service, banks’ 2011 earnings came to about 12 trillion won ($10.5 billion), up 29.2 percent from 9.3 trillion won a year earlier.
Noticeably, their earnings from service fees, including those on transactions via automated teller machines, marked an all-time high of 4.9 trillion won last year, compared with 4.4 trillion won in 2010.
Their former record earnings in the service charge sector was 4.7 trillion won, which was posted in 2007.
The banking services include remittance, internet banking and the use of ATMs.
But their earnings from the sector may be reduced in 2012 as the banking industry is moving to reach a consensus on slashing service fees on customer transactions amid public criticism over corporate greed.
Woori Bank became the first player to slash its fees last October. The commercial bank said it would push for additional measures to ease the burden on consumers.
Buoyed by the service fees, their earnings in the non-interest sector surged from 7.3 trillion won to 8.3 trillion won year-on-year.
Banks saw their combined profit in the interest sector reach 39.3 trillion won in 2011, up 3.4 percent from 38 trillion won a year before.
The FSS attributed their brisk performance to earnings reaped from selling shares of Hyundai Engineering & Construction, the nation’s largest builder.
During the third quarter, Kookmin Bank and six other players earned a pre-tax profit of 3.2 trillion won by offloading their stakes in the country’s top construction firm.
But the lenders suffered a loss of 300 billion won during the October-December period, compared with a profit of 2.3 trillion won in the third quarter, as they put aside more loan-loss reserves.
According to regulatory officials, the fall in costs to cover bad debts also helped bolster the lenders’ 2011 earnings.
Expenses for soured loans that had spiked since the second quarter of 2010 trended lower, at 11.8 trillion won last year, down from 15 trillion won in 2010.
Meanwhile, provincial lenders, including Pusan Bank, saw their profit drop from 900 billion won in 2010 to 800 billion won in 2011, the FSS said.
By Kim Yon-se (
kys@heraldcorp.com)
