South Korean banks saw their earnings inch up 1.2 percent in the first quarter from a year earlier thanks to increased interest income, the financial regulator said Tuesday.
The combined net income of 18 local banks, including top player Kookmin Bank and state-run Korea Development Bank, came to 4.4 trillion won ($4.1 billion) in the January-March period, compared with 4.3 trillion won a year earlier, the Financial Supervisory Service said in a statement.
The results are based on the locally adjusted version of the International Financial Reporting Standards, or K-IFRS. Local listed firms are required to adopt the new internationally accepted accounting standard from this year.
By the previously used accounting norm, the banks’ net income reached 3.4 trillion won for the first quarter, unchanged from a year ago. The new standard required the banks to set aside less to cover potential loan losses.
In the first quarter, the banks’ interest income rose by 100 billion won on-year to 9.7 trillion, the FSS said.
Non-interest income of the banks also climbed to 2.2 trillion won in the first quarter from 2 trillion won a year earlier, the regulator added.
Despite favorable first-quarter results, local banks are feared to face a rise in soured loans down the road as ailing builders are likely to continue to suffer from the country’s slumping housing market and an uptrend in borrowing costs, the FSS said. (Yonhap News)
“The FSS will continue to guide local banks to bolster their efficiency and profitability in order to boost their health and capacity to absorb loan losses,” the regulator said.