Banks‘ 2010 earnings jump 35.6%

Korean banks saw their earnings surge 35.6 percent last year from a year earlier thanks to increased interest income and profits from sales of stock holdings, the financial regulator said Tuesday.

Net income by 18 local banks, including top lender Kookmin Bank and Woori Bank, came to 9.4 trillion won ($8.4 billion) in 2010, compared with 6.9 trillion won in 2009, according to a report by the Financial Supervisory Service (FSS).

For the October-December period, the lenders’ net earnings stood at 2.1 trillion won, slowing from 2.7 trillion won posted in the previous three months, the FSS noted.

“The stronger 2010 bottom line came thanks to higher interest income stemming from an increase in net interest margin (NIM), according to the statement.

NIM, the gap between deposit and lending rates indicating profitability from lending, rebounded to 2.32 percent last year, up from 1.98 percent a year earlier and the highest level since 2007, the regulator said.

Driven up by market interest rate gains, the lenders posted 5.3 trillion in interest income last year, up 16.3 percent from 2009.

The upbeat result is also attributable to the banks‘ sale of stakes in companies that swapped debts for shares, it said.

The lenders, however, saw their loan quality worsen in 2010 as more construction project financing loans went sour amid a stagnant property market.

To cover potential loan losses, the banks set aside 14.8 trillion won last year, up 1.7 trillion won from a year earlier, the FSS said. 

(Yonhap News)