April 25, 2024

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[THE INVESTOR] Korea’s financial groups expect to post record profits in 2018, with KB Financial set to maintain the title as the most profitable firm for two consecutive years, according to data on Jan. 14.

With its fourth-quarter net profit estimated to rise 5.38 percent to 583 billion won, KB Kookmin Bank’s net profit for 2018 is estimated to amount to 3.47 trillion won (US$3.09 billion), up 4.05 percent on-year.

KB Financial dethroned Shinhan Financial Group in 2017, which held the top spot for nine straight years. 

Shinhan’s estimated net profit for last year is 3.2 trillion won, up 10.65 percent from 2017. In the last quarter of 2018, it saw a whopping 148.27 percent growth mainly due to the base effect. The year before, the group was stretched to cover for the struggling cable broadcaster D’LIVE, and also for Daewoo Shipbuilding & Marine Engineering and Kumho Tire’s bad debt provisions.

But once Shinhan completes the acquisition of Orange Life, formerly known as ING Life, it might be able to catch up with KB, according to analysts.

Shinhan bought a 59.15 percent stake in Orange Life for 2.3 trillion won. The current profit gap of about 200 billion won with KB can be narrowed once Orange Life’s profit, estimated at 2.09 billion won, is reflected in its bottom line this year.

Hana Financial is estimated to see a net profit of 2.358 trillion won, increasing by 11.43 percent. But its net profit in the fourth quarter was down 8.19 percent to 471 billion won due to a decrease in non-interest income.

Woori Bank is forecast to log a 41.04 percent jump to record 2.15 trillion won in net profit, with its fourth-quarter net profit declining by 1.31 percent. On Jan. 14, Woori returned as a holding company five years after it gave up the status as part of the government’s privatization scheme in November 2014. The holding company is expected to beef up its efforts to expand its profitability by mergers and acquisitions of securities and capital companies, according to Kim In, an analyst with SK Securities.

Other financial companies are also likely continue overseas expansion this year.

“We intend to pursue strategic M&A opportunities to reinforce our group’s portfolio and find a sustainable growth engine,” chief of KB Kookmin Bank Huh In said earlier this year.

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