South Korean Banks Expect Strong Q3 Earnings

Major South Korean banks are expected to post strong earnings in the third quarter despite the low interest rates and corporate restructuring as they focus more on profitable businesses, market watchers said Sunday.

    The combined net profit of the big four banks, Shinhan Financial Group, KB Financial Group, Hana Financial Group and Woori Bank, was estimated at 1.75 trillion won (US$1.54 billion) in the July-September period, according to the data compiled by the market researcher FnGuide.

    The market consensus based on 10 brokerage houses' projections was 5.3% up from the same period a year ago. All of their quarterly reports are due this week, state news agency (Yonhap) reported.

    Shinhan Financial Group is expected to remain on top with 607.7 billion won in expected net earnings, a 10.5% fall from a year earlier. The surge in fixed rate loans and demand deposits, accounts that may be withdrawn at any time, boosted its net interest margin, analysts said, while it raked in 5.2 billion won in profits by selling stakes in VISA. 

    The Bank of Korea (BOK) on Thursday froze the key rate at 1.25% for a fourth consecutive month, citing concerns about rapidly increasing household debt and a possible rate hike in the United States.