In the first three quarters this year so far, local-based financial companies recorded almost 2 trillion won ($1.71 million) in revenue but JB Financial was the only one that saw revenue increase despite the rate cut and sluggish global economy.
JB, a financial holdings company headquartered in Jeonju, Jeonbuk, logged a whopping 39.5 percent increase in revenue in the first three quarters to hit a record 294.2 billion won.
This compares with JB’s rivals. Daegu-based DGB Financial Group saw a 2.3 percent decline in revenue to 272.1 billion won, while Busan’s BNK logged a 1.9 percent fall to 529.2 billion won due to an increase in one-off management costs.
Local banks under BNK and DGB suffered net losses during the first three quarters. During that period, the net profits of BNK’s Busan Bank and Kyongnam Bank’s net profits fell 4.61 percent to 355.9 billion won and 4.24 percent to 162.6 billion won, respectively. DGB also suffered a 15.9 percent decline in net profit during the first-third quarter period, with earnings of 236.5 billion won. An official at DGB Group attributed declining profits due to low interest rates and losses occurred while selling off non-performing debts.
JB showed better performance when comparing major financial indicators. JB’s return on assets was 0.33 percent and return on equity was 11.8 percent, which is higher than for BNK and DGB. BNK’s return on assets and return on equity stood at 0.73 percent and 8.92 percent, respectively. DGB’s return on assets was 0.64 percent while return on equity stood at 9.09 percent.
In the third quarter, all three local financial holdings groups suffered a decline in the net interest margin, which is a measure of the difference between the cost of funding and what the bank charges for loans, following the Bank of Korea’s decision to cut base interest rate to 1.50 percent.
BNK fell by 8 basis points to 1.97 percent and DGB’s Daegu Bank saw its net interest margin declining 11 basis points as 87 percent of the total loans are variable-rate one.
JB fended off the impact of interest rate cut. The group’s net interest margin inched down by 1 basis point to 2.77 percent. The company said that it was able to secure low-cost funding at its two banks in the third quarter.
By Park Ga-young (email@example.com)