S. Korean banks post biggest quarterly profit in six years

Indo Asian News Service

Seoul, May 2 (IANS) South Korean banks posted the biggest quarterly profit in six years -- thanks to one-off factors, data provided by a financial watchdog showed on Tuesday.

Net income of local commercial banks was 4.3 trillion won ($3.8 billion) in the January-March quarter -- up 49 per cent from a year earlier, Xinhua news agency quoted the Financial Supervisory Service as saying.

It was higher than any first-quarter figures recorded in the past six years.

One-off factors led to the increased earnings of the banks, including the South Korean currency's appreciation to the US dollar that increased profits from foreign exchange-relevant derivatives. Profits from bond and stock sales also contributed to the strong earnings.

Loss from loans to troubling shipbuilders and shipping firms reduced to 0.8 trillion won in the quarter compared with 1.8 trillion won a year earlier.

The government-led restructuring of major shipbuilders and shipping firms have been underway as lower profits and higher costs hit the industries amid the global economic slump and weaker trade.

Interest income, a main source of revenue for local banks, increased 4.3 per cent, sending the net interest margin to 1.58 per cent in the first quarter that was up 0.03 percentage points from a year ago.

The net interest margin, which tumbled to an all-time low in the third quarter of last year, rebounded for the two straight quarters.

Return on asset for banks rose 0.24 percentage points over the year to 0.76 per cent in the first quarter. Return on equity advanced 2.97 percentage points to 9.71 per cent.