The cumulative third-quarter net income for this year of the four major financial holding companies, including KB Financial Group, Shinhan Financial Group, Hana Financial Group, and Woori Financial Group, surpassed 17 trillion won. Although stock market trading volume decreased in the second half and regulatory restrictions on household loans continued, solid interest income from the banking sector supported performance. The combined annual net profit of the four major financial groups is expected to exceed 20 trillion won for the first time in history this year. Financial holding companies are accelerating shareholder returns by pushing forward with record-scale share buybacks and cancellations, as well as cash dividends.
According to financial industry sources on the 29th, including KB Financial Group, which announced its third-quarter earnings that day, the cumulative third-quarter net income of the four major financial holding companies for this year totaled 17.1019 trillion won. This represents an increase of 1.29 trillion won (8.16%) from the same period last year (15.8119 trillion won).
By financial holding company, KB Financial Group maintained its position as the "leading financial group" with a net profit of 5.7921 trillion won, an increase of 13.1% compared to the same period last year. Shinhan Financial Group also increased by 12.7% year-on-year to 5.0274 trillion won. Shinhan Financial Group surpassed its annual net profit from last year in just three quarters, marking the first time in history that the group's net profit exceeded 5 trillion won, demonstrating notable growth. Hana Financial Group's cumulative third-quarter net profit was 3.6243 trillion won, a 5.6% increase from the same period last year. Woori Financial Group recorded a net profit of 2.6581 trillion won, showing a unique contraction of 4.9% compared to the same period last year (2.7959 won). This was influenced by the base effect from bargain purchase gains related to the acquisition of Dongyang Life Insurance and ABL Life Insurance last year.
The combined annual net profit of the four major financial groups is also expected to set a new record high this year. The combined annual net profit is projected to significantly exceed 20 trillion won for the first time in history.
A key factor behind the record-high performance is the stable profitability of the banking sector. Despite strengthened government regulations on household loans, loan assets grew primarily driven by corporate loans, continuing the trend of increasing interest income. KB Financial Group's cumulative third-quarter net interest income was 9.9853 trillion won, a 2.9% increase from the same period last year. The outstanding balance of Korean currency loans at KB Kookmin Bank stood at 391 trillion won as of the end of September, an increase of approximately 14 trillion won from the end of last year (377 trillion won). Corporate loan balances increased from 194 trillion won to 205 trillion won during the same period, leading loan growth. Hana Financial Group's cumulative third-quarter interest income was 7.4832 trillion won, a 10.4% increase compared to the same period last year. Woori Financial Group also saw its cumulative interest income rise by 4.5% year-on-year to 7.0359 trillion won.
In contrast, the securities sector, which drove first-half performance, slowed somewhat in the third quarter. KB Financial Group's third-quarter securities business revenue fees were 303.4 billion won, a 46.6% decrease from the previous quarter (568.4 billion won). Trust income also decreased by 52.1% during the same period, from 335 billion won to 160.3 billion won. However, cumulative securities business revenue fees increased by 150.2% year-on-year, maintaining the performance improvement effect from the strong first half. Shinhan Financial Group's third-quarter non-interest income decreased by 45.5% compared to the previous quarter. Hana Financial Group also saw its third-quarter fee income and trading valuation gains decrease by 20.0% and 45.6%, respectively.
The decline in exchange rates also affected performance and capital management. Hana Financial Group reflected a foreign currency translation gain of 186.8 billion won due to the drop in the won-dollar exchange rate in the third quarter. The reduction in risk-weighted assets (RWA) resulting from the lower won-dollar exchange rate also positively contributed to improving the capital ratios of financial holding companies. As of the end of September, Common Equity Tier 1 (CET1) ratios were recorded at 13.80% for KB Financial Group, 13.62% for Shinhan Financial Group, 13.45% for Hana Financial Group, and 13.80% for Woori Financial Group. All levels improved compared to the previous quarter.
Based on core affiliated banks, Shinhan Bank maintained its position as the leading bank. However, the gap with KB Kookmin Bank, which was 223.1 billion won in the first half, narrowed to 107.4 billion won on a cumulative third-quarter basis.
Based on strong performance, shareholder returns are also expanding. Shinhan Financial Group plans to acquire a total of 1.6 trillion won in treasury shares this year, an increase of 28% from the previous year. The board of directors resolved to acquire an additional 450 billion won in treasury shares and pay a quarterly cash dividend of 740 won per share. Hana Financial Group also decided on a 250 billion won share buyback and cancellation for the fourth quarter, bringing its cumulative scale this year to 949 billion won. The third-quarter dividend per share was increased by 26.6% from the same period last year to 1,165 won. Hana Financial Group also plans to expand its total annual cash dividends by more than 10% compared to last year.
The board of directors of KB Financial Group resolved on a quarterly cash dividend of 1,167 won per share, an increase of 237 won from the same period last year, totaling 404.9 billion won. Woori Financial Group is also pushing forward with a total annual share buyback and cancellation of 350 billion won, consisting of 200 billion won in the first half and 150 billion won in the second half, embarking on record-scale shareholder returns. In addition to performance growth, improved capital headroom due to falling exchange rates is expected to see financial holding companies' moves to expand shareholder returns continue through year-end.
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