SEOUL, Sept. 19 (Yonhap) — South Korea’s savings banks saw their combined net profit drop 15.1 percent year-on-year in the first half despite an increase in interest income as they set aside more loan loss reserves amid heightened economic uncertainty, data showed on Monday.
According to preliminary data from the Financial Monitoring Service (FSS).
The decline came as they set aside more reserves for loan losses than they earned from paying customer interest, which rose in line with central bank rate hikes to rein in the inflation.
Their loan loss reserves rose 491 billion won year-on-year in the first half, while their interest income rose 481 billion won in the same period, the data showed.
In the first half of this year, their total lending stood at 114.5 trillion won, up 13.9 percent from six months earlier. Loans to households and businesses increased by 4.7% and 20.2% respectively.
The savings banks’ total assets were valued at 133.4 trillion won at the end of June, up 12.8 percent from six months earlier, while their debt also rose 13.5 percent over the same period. period to reach 119.9 trillion won. The combined capital of these banks also rose 7% to 13.5 trillion won, the data showed.
Their delinquency rate stood at 2.6% at the end of June, up 0.1 percentage point compared to the end of December.
Their average capital adequacy ratio reached 12.88% at the end of June, down 0.43 percentage points from six months earlier, the data showed.
It is still higher than an 8% ratio recommended by the Bank for International Settlements, an international organization of central banks.