SEOUL, Mar 16 (NNN-YONHAP) – South Korean banks’ net profit grew almost 10 percent last year, due to soaring interest income, caused by policy rate hikes, financial watchdog data showed, today.
The combined net profit of local banks amounted to 18.5 trillion won (14 billion U.S. dollars) in 2022, up 9.6 percent from the previous year, according to preliminary data, from the Financial Supervisory Service (FSS).
Banks’ interest income jumped 21.6 percent over the year to 55.9 trillion won (42.6 billion dollars), last year.
Domestic banks raised lending rates faster than deposit rates, to generate profit on the back of policy rate hikes.
The country’s central bank began to tighten its monetary policy stance in Aug, 2021, lifting its benchmark interest rate by 3.0 percentage points to 3.50 percent in Jan, this year.
The average net interest margin (NIM) of banks, or the difference between interest received and interest paid, added 0.17 percentage points to 1.62 percent last year.
Non-interest income tumbled 52.0 percent over the year to 3.4 trillion won (2.6 billion dollars) in 2022, on securities-related losses and lower commission profits.
Loan-loss provisions spiked 55.1 percent to 6.3 trillion won (4.8 billion dollars), as banks expanded loan-loss reserves in preparation for uncertainties at home and abroad.
The return on assets of local banks, a key gauge of profitability, declined 0.01 percentage point to 0.52 percent last year, but the return on equity rose 0.44 percentage points to 7.41 percent.– NNN-YONHAP
