Major banks fare well in H1 despite low rates

South Korea's four major banks likely posted an 11 percent on-year jump in their first-half net profits on their efforts to boost profits in the nonbanking sector and less exposure to debt-ridden companies, industry people said Monday.

The country's four leading lenders -- Shinhan Financial Group, KB Financial Group, Hana Financial Group and Woori Bank – reported 3.883 trillion won ($3.4 billion) in combined net profit for the January-June period, up from 3.494 trillion won a year earlier, according to estimates by bank officials.

"As the banks are less exposed to loans extended to the debt-laden shipping and shipbuilding sectors compared with state-owned banks (such as the Korea Development Bank and the Export-Import Bank of Korea), they could focus on making profits in their nonbanking businesses despite record-low rates," a Shinhan official said.

Shinhan Financial is expected to beat three others with a projected net profit of 1.395 trillion won in the first half, the estimates showed.

In a sharp contrast, the state-run NongHyup Financial Group Inc. is on track to shift to a net loss in 2016 from a net profit of 487 billion won a year earlier on sharply increased loan-loss provisions.

In June, NongHyup Chairman Kim Yong-hwan told Yonhap News Agency the group will put aside provisions of up to 1.8 trillion won this year due to its heavy exposure to cash-strapped shipping and shipbuilding companies.

Banks' first-quarter earnings will be available starting in late July.  (Yonhap)