The third-quarter net profits of the four major financial holding companies—KB Financial Group, Shinhan Financial Group, Hana Financial Group, and Woori Financial Group—are expected to exceed 5.6 trillion won, continuing their year-on-year growth trend. Compared with the record-breaking second quarter, net profit is projected to decline by approximately 6%, largely due to reduced earnings from securities subsidiaries. However, even amid constraints on business expansion caused by household loan regulations, asset growth centered on corporate loans, rising interest rates, and a decline in the won-dollar exchange rate are expected to underpin performance, suggesting that the four groups will once again set a new annual record for net profit.
According to financial industry sources on the 6th, Hana Financial Group and Woori Financial Group will release their third-quarter earnings on the 23rd, followed by Shinhan Financial Group on the 27th and KB Financial Group on the 29th. Based on data compiled by financial information provider FnGuide as of the 5th, the consensus estimate (average of securities firms’ forecasts) for the four major financial holding companies’ net profit attributable to owners of the parent in the third quarter this year totals 5.6485 trillion won. This represents an increase of approximately 3% compared with the same period last year.
However, compared with the 6.097 trillion won in net profit recorded by the four major financial holding companies in the second quarter, a decrease of 361.2 billion won (6.0%) is projected. In the second quarter, securities subsidiaries significantly boosted earnings thanks to a stock market boom and increased trading volume, but this effect has somewhat weakened in the third quarter. Although the profit scale will shrink compared with the previous quarter, the growth trend relative to the same period last year will continue.
By holding company, KB Financial Group is projected to record a third-quarter net profit of 1.8322 trillion won. This represents an 8.7% increase from the same period last year but an 8.0% decrease compared with the previous quarter (1.9922 trillion won). Shinhan Financial Group is expected to post 1.6038 trillion won, a 12.7% increase from the same period last year, while being projected to decline by 11.9% compared with the previous quarter (1.8201 trillion won).
Hana Financial Group is forecast to record 1.2275 trillion won in the third quarter, an 8.4% increase from the same period last year and a 2.9% increase from the previous quarter (1.1928 trillion won). Woori Financial Group is estimated at 985 billion won, a 2.0% decrease from the previous quarter (1.0046 trillion won). Although this represents a 20.8% decline year-on-year, the base effect was influenced by one-time gains such as bargain purchase gains arising from the acquisitions of Dongyang Life Insurance and ABL Life Insurance in the third quarter last year.
In particular, KB Financial Group and Shinhan Financial Group, which show relatively large declines compared with the previous quarter, are expected to reflect the impact of slowing performance at their securities subsidiaries. In the second quarter, amid a vibrant stock market, securities subsidiaries such as KB Securities and Shinhan Investment Corp drove an increase in non-interest income for their respective groups, but net profit is projected to decline from the previous quarter in the third quarter.
Stable interest income from the banking sector is expected to underpin performance. Despite strengthened household loan management by financial regulators, the financial holding companies continued asset growth centered on corporate loans. Rising market rates, which pushed up lending rates, also helped defend interest income.
However, as funding costs for time deposits and bank bonds have also risen in tandem, it is widely projected that the Net Interest Margin (NIM) of major banks will decline slightly from the previous quarter.
The decline in the won-dollar exchange rate has also acted as a positive factor. The appreciation of the won has improved foreign currency translation gains and losses, while the reduction in won-denominated Risk-Weighted Assets (RWA) is expected to have a positive impact on capital ratio management, including the Common Equity Tier 1 (CET1) ratio.
Even if quarterly performance slows somewhat from the previous quarter, there is a high probability that the four major financial holding companies will achieve their highest-ever level of net profit on an annual basis. The consensus estimate for KB Financial Group’s annual net profit this year is 6.6427 trillion won, marking its first entry into the “6 trillion won club.” Shinhan Financial Group is also expected to approach 6 trillion won with a forecast of 5.8849 trillion won. Overall, the four major financial holding companies are projected to maintain solid profit growth and once again set a new annual record for net profit, following last year’s achievement.
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