Savings banks post 765.8 billion won in first-half net profit; delinquency rate falls to 6.3%

[Financial News] The savings bank sector posted more than 760 billion won in net profit in the first half of this year, extending its run of profitability. Key soundness indicators also improved, with both the delinquency rate and the ratio of non-performing loans falling.
According to the Korea Federation of Savings Banks on the 28th, the 79 domestic savings banks recorded a combined net profit of 765.8 billion won in the first half of the year. After posting 333.8 billion won in the first quarter, they earned 432 billion won in the second quarter, marking two consecutive quarters in the black.
An official from the Korea Federation of Savings Banks explained that easing provisions for loan losses and higher gains from securities operations helped improve results.
Total assets in the savings bank sector stood at 120.6 trillion won at the end of June, up 1.3 trillion won from 119.3 trillion won in the previous quarter.
Loans rose by 800 billion won from the previous quarter to 95.8 trillion won. The increase was driven by growth in private mid-rate loans and corporate lending. Outstanding private mid-rate loans, which stood at 17.6 trillion won at the end of last year, remained at that level in the first quarter before rising to 18.2 trillion won at the end of June.
Corporate loans increased by 400 billion won from the previous quarter to 48.5 trillion won. Household loans rose by 200 billion won to 39.6 trillion won.
Deposits also increased. Deposit balances at the end of June reached 100.4 trillion won, up 800 billion won from 99.6 trillion won in the previous quarter. The federation said this was influenced by fund shifts into the capital market and higher deposit rates introduced to prepare for maturing time deposits in the second half of the year.
Interest income in the first half totaled 2.7326 trillion won. Non-interest income came to 436.4 billion won.
Provision expenses for loan losses reached 1.3942 trillion won on a cumulative basis in the first half. Of that, 801.8 billion won was booked in the first quarter and an additional 592.4 billion won in the second quarter, easing the quarterly burden of reserve accumulation.
Soundness indicators also improved. The delinquency rate stood at 6.3% at the end of June, down 0.4 percentage point from 6.7% in the previous quarter. Aggressive sales and write-offs of bad loans, along with loan growth, contributed to the decline. The sector's sales and write-off volume expanded from 600 billion won in the first quarter to 1.1 trillion won in the second quarter.
The delinquency rate for corporate loans fell 0.5 percentage point from 8.9% to 8.4%, while the household loan delinquency rate dropped 0.2 percentage point from 4.8% to 4.6%. The ratio of non-performing loans also declined 0.4 percentage point from 8.6% in the previous quarter to 8.2%.
The capital adequacy ratio, based on the Bank for International Settlements (BIS) standard, stood at 15.7%, down 0.3 percentage point from 16.0% in the previous quarter. The decline reflected an increase in risk-weighted assets as lending expanded. Even so, the ratio remains about twice the legal minimum, indicating stable capital adequacy.
The liquidity ratio was 138.9%, and the loan-loss reserve ratio was 107.9%, both above the legal minimum of 100%.
An official from the Korea Federation of Savings Banks said, "In the second half, unfavorable business conditions are likely to continue, including greater volatility at home and abroad in the capital market, a delayed recovery in the real estate market, and weaker debt repayment capacity among vulnerable borrowers." The official added, "Even so, we plan to gradually expand financial support for small and medium-sized businesses, as well as vulnerable borrowers." 

[email protected] Seo Ji-yoon Reporter