IBK: Cumulative net profit of 2.2 trillion won in the first three quarters, down 2% year on year

[Financial News] Industrial Bank of Korea (IBK) increased its standalone net profit by 47.9% quarter on quarter in the third quarter of this year, helped by an improvement in its net interest margin (NIM). Overseas subsidiaries, including China Limited, which suffered a 'Jwijeu'-related incident, swung to losses, leaving growth in consolidated net profit attributable to controlling shareholders (12.3%) relatively modest. As the bank continued to provide loans to small and medium-sized enterprises (SMEs), performance diverged between its core banking operations, overseas businesses and non-bank businesses.
IBK disclosed on the 26th that it posted consolidated net profit attributable to controlling shareholders of 767.8 billion won in the third quarter. This was up 12.3% from 683.6 billion won in the second quarter. The figure was 0.7% below the average market estimate of 773.5 billion won for the third quarter, but was broadly in line with expectations. The bank's cumulative standalone net profit for the first three quarters was 2.0089 trillion won, up 0.6% from the same period a year earlier. Consolidated net profit attributable to controlling shareholders was 2.2001 trillion won, down 2.2%.
An IBK official explained, "Despite challenging market conditions, including rising domestic and overseas interest rates and increased volatility in financial markets, improved interest income—supported by solid growth in interest-earning assets, the bank's core business—underpinned our performance."
The outstanding balance of SME loans reached 272 trillion won, up 10.1 trillion won (3.9%) from the end of last year. The bank said that continued expansion of productive finance had given it a 24.5% share of the SME market and allowed it to maintain a commanding lead. The credit cost ratio was 0.53%, up 0.09 percentage points from the same period a year earlier. This reflected the advance provisioning of funds in preparation for worsening business conditions for SMEs. The non-performing loan ratio stood at 1.31%, down 0.04 percentage points year on year. The bank said it had continued to provide a steady supply of SME loans while also maintaining stable asset quality.
IBK's NIM rose by 2 basis points, from 1.59% in the second quarter to 1.61% in the third quarter (1 basis point = 0.01 percentage point). A substantial portion of IBK's variable-rate corporate loans is structured to be linked to the three-month Korea Inter-Bank Offered Rate (KORIBOR). Increases in market rates were passed through to lending rates relatively quickly. Its status as a specialized bank not subject to the loan-to-deposit ratio regulations imposed on commercial banks also relatively eased the burden of competing on deposit rates.
Improved earnings from foreign exchange derivatives also contributed to the increase in performance. The bank's standalone foreign exchange derivative-related gains and losses rose from 1.9 billion won in the second quarter to 327.9 billion won in the third quarter. The bank's non-interest income increased over the same period from 91.1 billion won to 365.6 billion won. Fee income fell 8.2%, while gains and losses related to securities declined 4.5%.
An IBK official said, "Even as domestic and international uncertainties, including policy rate hikes and rising prices, persist, we will expand the provision of policy finance to small business owners and the self-employed, as well as high-tech innovative companies," and emphasized, "We will continue to strengthen the bank's competitiveness through a major AI (artificial intelligence) transformation and other efforts."

[email protected] Park Mun-su Reporter