Headquarters of Korea's top four financial groups — from left, KB Kookmin, Shinhan, Hana and Woori. Korea Times file

The country's top four financial groups reported record-high net profits in the second quarter, underpinned by strong growth of interest income despite heavier burdens of loan loss provisions allocated to mitigate the stagnant performances of their troubled derivatives, market watchers said Friday.

KB Financial Group Chairman Yang Jong-hee / Courtesy of KB Financial Group

KB

KB Financial Group said, Tuesday, net income for the second quarter totaled 1.73 trillion won ($1.24 billion).

Propelling the year-on-year increase of 15.5 percent and the record-high quarterly figure was a partial recovery of loan-loss reserves set aside to compensate buyers of troubled equity-linked securities derivatives tied to the Hang Seng China Enterprises Index. This high-risk, high-volatility index includes shares in 50 Chinese companies traded outside mainland China.

The group's net interest income for the same period reached 3.2 trillion won, up 6.5 percent from the previous year. This brought the total net interest income for the first six months to 6.36 trillion won.

The 9 percent year-on-year increase in the January to June figures was driven by higher average loan balances and the resulting growth in interest income from non-banking subsidiaries.

Their combined income constituted nearly 40 percent of the group's net profit.

The group's most lucrative subsidiary, KB Kookmin Bank, registered a net income of 1.11 trillion won in the second quarter, up 20 percent from a year earlier.

KB Securities, its brokerage subsidiary, posted 178.1 billion won in net income, up 64 percent from the year before.

Its life and non-life subsidiaries registered net profits of 98.9 billion won and 279.8 billion won, respectively. The figures were up slightly from the previous year.

KB Kookmin Card achieved a quarterly net profit of 116.6 billion won, up from 110.9 billion won a year ago.

The group said a 400 billion won share buyback for cancellation will be completed in the latter half of this year. Including the already purchased and canceled shares worth 320 billion won, the total for the shareholder return-enhancement program will reach 720 billion won.

Woori Financial Group Chairman Yim Jong-yong / Yonhap

Woori

Woori Financial Group said Thursday its net profit in the second quarter was 931.4 billion won, the highest quarterly figure to date. It was up 12 percent from a year earlier.

The higher-than-expected profit came despite a rise in loan-loss reserves allocated to address potential losses from real estate project financing loans.

Of significance was the group's risk management, as illustrated by a limited 5 percent year-on-year decrease in total loss reserves of over 775 billion won, despite the subtraction of 80 billion won from the reserve for the project financing risk responses.

Also to the credit of the risk management was the non-performing loan ratio limited to 0.56 percent for the group and 0.23 percent for its banking subsidiary.

The group's net income in the first six months of this year stood at 1.67 trillion won, up 13.7 percent from the year before.

Shinhan Financial Group Chairman Jin Ok-dong / Courtesy of Shinhan Financial Group

Shinhan

Shinhan Financial Group said Friday it generated a net income of 1.43 trillion won in the second quarter, up 7.9 percent from the previous quarter.

The figure for the first six months of this year was 2.75 trillion won, up 4.6 percent from a year earlier.

Among the key drivers of the group's strong earnings were increased interest income from a larger pool of corporate borrowers, higher non-interest income and revenue from fees and brokerage services.

Of particular note was the group's global net income surging to 410.8 billion won in the first half, up 32.4 percent year-on-year.

Hana Financial Group Chairman Ham Young-joo / Courtesy of Hana Financial Group

Hana

Hana Financial Group registered 1.03 trillion won in net profit for the April to June period, up 2.4 percent from the previous year, according to the firm's filing on Friday.

The strong performance was powered by robust interest income, despite heightened volatility in the financial market from within the country and abroad.

The group said Hana's shareholders will receive a quarterly per-share dividend payout of 600 won.

A total of 300 billion won of group shares were bought for retirement before July, as part of Hana's commitment to fortifying shareholder returns.