S. Korea’s firms see exports drop, banks enjoy earnings boost in 2018

South Korea’s major companies saw their exports drop last year, amid sluggish global growth and US-China trade tension, but banks enjoyed record-high revenue on the back of interest earnings, data showed Sunday.

The contrast was all the more conspicuous during the fourth quarter, when banks -- commercial, provincial and internet-only -- marked a record-high figure in net profit, while key exporters turned into the red.

According to data compiled by the Financial Supervisory Service and the Korea Exchange, the combined net profit of the 645 Kospi-listed firms here stood at 75 trillion won ($66 billion) as of December, down 4.8 percent from a year earlier.

The on-year decrease became steeper when excluding tech giant Samsung Electronics which accounts for 14.9 percent of the domestic stock market in sales. Setting aside the No. 1 chipmaker, the corresponding figure came down to 43 trillion won, down 15.4 percent during the same period.

Banks, however, saw their combined net profit surge 23.4 percent on-year to post 13.8 trillion won in 2018.

The visible rise was attributable to a rise in net interest margin and an improvement in loan-deposit spread, which climbed to 1.66 percent from 1.63 percent and to 2.06 percent from 2.03 percent in 2017-2018, respectively.

Of their yearly total of 40.3 trillion won, banks made 10.5 trillion won in interest earnings in October-December, which was the highest quarterly figure ever, data showed.

During the same quarter, Samsung saw its sales and operating profit fall 10.2 percent and 28.7 percent, respectively, from a year earlier, reflecting the slowdown in the global semiconductor sector.

Hyundai Motor Group, the country’s leading carmaker and second-largest conglomerate by assets, turned to the red posting a net loss of 200 billion won in the given quarter. The key reason was the sales drop amid the persisting trade dispute between Washington and Beijing, which weighed heavily on Seoul’s export-dependent economy.

Petrochemicals and battery maker LG Chem and steelmaker Posco also saw their yearly net profit slip 24.9 percent and 36.4 percent on-year, respectively.

“Local banks tend to settle for their loan-deposit margins, making little effort to develop new growth engines amid uncertainties,” said Park Sang-in, professor at Seoul National University’s Graduate School of Public Administration.

By Bae Hyun-jung(tellme@heraldcorp.com)