April 26, 2024

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[THE INVESTOR] Six Chinese banks operating in Korea saw their earnings plunge last year amid China’s economic slowdown and falling interest income, data from the Financial Supervisory Service showed on April 10.

The key revenue source for Chinese banks here has been loans to their compatriot businesses at a lower interest rate than at home. But the business has been hit hard by the sluggish Chinese economy and the weaker yuan. 

“Chinese businesses are not lending money due to the sluggish Chinese economy, driving down the profits of Chinese banks here,” an FSS official said.

The China Construction Bank saw the steepest 84 percent drop in net profit to 6.8 billion won (US$5.9 million) last year, followed by the Bank of China with a 68 percent fall to 25.5 billion won and the Industrial and Commercial Bank of China with a 48 percent decrease to 49.2 billion won.

For foreign banks overall, 2016 was a tough year as their net profit plunged almost 40 percent on average, the FSS said. The combined net profit of 43 foreign banks was 689.3 billion won last year, a 39.1 percent decline from a year ago.

In the meantime, net profit of foreign savings banks soared a whopping 459 percent to 163 billion won.

“Some foreign savings banks acquired loss-making domestic savings banks and succeeded in turning them around,” an FSS official said. “They are also making an aggressive push in mortgage loans.”

As of the end of 2016, a total of 168 overseas foreign finance companies from 29 countries are operating in Korea, adding two from the previous year.

The combined assets stood at 402.6 trillion won, up 3.9 percent from a year ago, making up 8.9 percent of the nation’s total assets owned by finance companies.

By Park Ga-young (gypark@heraldcorp.com)