The four major financial holding companies in Korea are expected to report a net profit of nearly 5 trillion won for the first quarter of this year. Amid the impact of the United States' mutual tariff imposition decisions on not only key industries like automotive and semiconductors but also the entire sector, the financial industry's strong performance is likely to continue, supported by the net interest margin derived from deposits and loans.
According to financial information provider FnGuide on the 8th, the estimated net profit for the four major financial holding companies — KB, Shinhan, Hana, and Woori — for the first quarter of this year was 4.8759 trillion won as of the previous day. This represents an increase of 13.6% compared to the net profit of 4.2915 trillion won in the first quarter of last year.
By holding company, the net profit forecast for KB Financial in the first quarter is the highest at 1.578 trillion won, marking a 48.4% increase from the same period last year (1.0632 trillion won). In the first quarter of last year, the subsidiary KB Kookmin Bank reflected a provision of 862 billion won for losses related to Hong Kong H-index linked securities (ELS), resulting in a decrease in net profit compared to the previous year. KB Financial's record net profit for the first quarter was 1.5087 trillion won in 2023, and this year's first-quarter forecast is expected to exceed that.
The net profit forecasts for Shinhan Financial and Hana Financial in the first quarter of this year are 1.4711 trillion won and 1.0525 trillion won, respectively, indicating expected increases of 9.1% and 1.1% compared to the same period last year. In contrast, Woori Financial's net profit forecast is 774.3 billion won, down 7.7% from the first quarter of last year. This is attributed to the postponement of employee voluntary retirement schedules to the first quarter of this year, which led to the reflection of related expenses in this period rather than in the fourth quarter of last year.
The reason the financial holding companies continue to post solid results in the first quarter is that their key affiliate, the banks, have achieved stable interest income. Despite the Bank of Korea lowering the benchmark interest rate three times since October of last year, banks have maintained a high net interest margin due to household loan management. As the net interest margin increases, the banks' revenue also grows.
Even though the benchmark interest rate that determines the banks' deposit and lending rates has dropped to 2.75% per year, the banks' net interest margin has actually widened compared to a year ago. According to the Korea Federation of Banks, the average net interest margin for the five major commercial banks — KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup — was 1.57% in February, nearly doubling from 0.87% in February of the previous year. This is the highest level since the Korea Federation of Banks began releasing net interest margin data in 2023.
However, it is not a situation to relieve anxiety. While the financial sector, a part of the domestic industry, is not directly affected by tariffs, if the export corporations or SMEs that borrowed money face instability, the banks may incur losses. Banks are strengthening monitoring of loan amounts and arrears trends for corporations that are highly dependent on exports to the U.S. to enhance loan quality management. They are also planning to focus on managing high-risk exposure sectors and adjusting their loan portfolios.
A representative from a major commercial bank said, "With the delinquency rate for SME loans rapidly worsening this year, the impact from tariff shocks is also expected to be significant," adding, "We may need to set aside more provisions for expected credit losses in the first quarter than planned, which could lead to actual results falling short of our forecasts."