Why Are Major Financial Groups in South Korea Reporting Record Profits in H1?
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Synopsis
Discover how South Korea's four leading financial holding companies defied expectations by posting record profits in the first half of 2025. Despite challenges like declining interest rates and economic uncertainty, these financial giants showcased impressive growth. Learn more about their strategies and the outlook for the remainder of the year.
Key Takeaways
- Record earnings achieved by four major financial groups.
- Combined net profit increased by 10.5% year-on-year.
- Strategic measures included share buybacks to enhance shareholder value.
- Outlook for the second half is cautious amid rising household debt concerns.
- Focus on diversified revenue streams and investment expansion.
Seoul, July 27 (NationPress) Despite economic uncertainties and declining interest rates, four leading financial holding companies in South Korea have reported unprecedented earnings in the first half of this year, according to data released on Sunday.
The total net profit for KB Financial, Shinhan Financial, Hana Financial, and Woori Financial reached 10.33 trillion won (approximately US$7.47 billion) during the initial six months of 2025, reflecting a 10.5 percent increase compared to the same period last year, as per their regulatory filings, as reported by the Yonhap news agency.
Notably, KB, Shinhan, and Hana each achieved double-digit year-on-year growth in net profit, setting new benchmarks for first-half earnings.
Specifically, KB's profit soared by 23.8 percent year-on-year in the first half, amounting to 3.44 trillion won. Shinhan followed with a net profit of 3.04 trillion won, marking an increase of 10.6 percent.
Meanwhile, Hana Financial's net profit climbed 11.2 percent to 2.3 trillion won during the same timeframe.
In contrast, Woori experienced a decline in its first-half earnings, with net profit dropping 11.6 percent to 1.55 trillion won.
The four financial groups collectively generated 21.09 trillion won in interest income from January to June, despite the Bank of Korea (BOK)'s monetary easing cycle that commenced late last year.
Their non-interest income also saw a 7.2 percent increase year-on-year, reaching 7.21 trillion won.
Officials indicated that the declines in interest rates and the wonderful won-U.S. dollar exchange rates contributed to an overall boost in gains from securities, foreign exchange, and derivatives.
Additionally, increased fees from bank retirement pensions, bancassurance sales commissions, and securities brokerage commissions have also bolstered their non-interest income.
However, the outlook for the second half appears bleak, as financial authorities have directed banks to cut their total household loan targets by half for the rest of the year amid rising concerns over escalating household debt.
President Lee Jae Myung has urged financial institutions to prioritize expanding investments rather than relying on easy interest gains from mortgage loans.
The holding companies have initiated measures to enhance shareholder value, including further share buybacks.
KB Financial announced plans to repurchase and cancel 850 billion won in its own stocks, while Shinhan and Hana disclosed similar initiatives amounting to 800 billion won and 200 billion won, respectively.
Point of View
The impressive earnings reported by South Korea's financial holding companies highlight resilience in the face of economic challenges. While concerns about household debt loom large, the strategic measures taken by these companies indicate a proactive approach to maintaining growth and shareholder value.
NationPress
27/07/2025
Frequently Asked Questions
What factors contributed to the record profits of South Korean financial groups?
The record profits were driven by increased gains from securities, foreign exchange, and derivatives, alongside higher fees from bank retirement pensions and bancassurance sales commissions.
How did interest rates affect these financial groups?
Despite declining interest rates, the financial groups managed to enhance their performance through diversified revenue streams and effective management strategies.
What measures are being taken to support shareholder value?
The financial holding companies have initiated share buyback programs to enhance shareholder value, with KB Financial leading the way with a significant stock repurchase plan.
What is the outlook for the second half of the year?
The outlook remains cautious, as financial authorities have urged banks to reduce household loan targets amid growing concerns over rising household debt.
Who is leading the call for financial institutions to change their focus?
President Lee Jae Myung has called for financial institutions to prioritize expanding investments rather than relying on easy interest gains from mortgage loans.
