South Korean banks saw their net profit rise 13.7 percent in the third quarter from a year earlier on reduced bad debt losses and increased interest income, the financial watchdog said Sunday.

The combined net income of 18 local banks stood at 1.7 trillion won ($1.55 billion) in the July-September period, compared with 1.5 trillion won during the same period last year, according to the Financial Supervisory Service.

For the first nine months of the year, the banks’ net profit reached a cumulative 5.4 trillion won, up from 4.2 trillion won a year earlier.

The strong bottom line came as the lenders set aside less loan reserves for the three-month period on decreased fresh bad debts.

Their bad debt expenses came in at 2.6 trillion won, down from 2.8 trillion won a year ago.

A rise in interest income also contributed to the increase in net profit, rising to 8.9 trillion won from 8.6 trillion won over the cited period.

The net interest margin, a key gauge of their profitability, edged down to 1.81 percent in the third quarter from 1.82 percent in the previous quarter.(Yonhap)