South Korea's seven bank holding companies saw their net profits plunge more than 16 percent on-year in the first half of 2016 on increased expenses from bad loans, government data showed Monday.

They reaped a total of 3.44 trillion won ($3.11 billion) on consolidated financial statements, down 16.2 percent from the first six months of 2015, according to the Financial Supervisory Service.

It's largely attributable to growth in loan loss reserves with the restructuring of the shipping and shipbuilding industries under way.

NongHyup Financial Group swung to 138.5 billion won of deficits from 410.4 billion-won net profits a year earlier. The ratio of NongHyup's nonperforming loans to its total lending stood at 1.81 percent, the highest among the seven bank holding companies.

Net profits of Shinhan Financial Group and KB Financial Group declined 7.4 percent and 1.7 percent, respectively.

In contrast, JB Financial Group posted 37.2 percent in net profits, while Hana Financial Group's net jumped 10.4 percent.

Meanwhile, the aggregate assets of the local bank holding firms with 162 subsidiaries totaled 1,612.3 trillion won as of end-June, up 4.2 percent from a year earlier.

Their combined BIS total capital ratio also rose 0.24 percentage point to 13.96 percent, meaning their improved capital soundness.

FSS officials, however, warned domestic banks against the possibility that their profitability and financial health will be hit by drawn-out sluggish domestic spending and U.S. interest rate hikes. (Yonhap)