S.Korea’s Woori Financial profit up on interest rate margins

Woori Financial Group, South Korea’s fourth-largest financial holding company, logged growth in a quarterly net profit as larger interest rate margins powered the earnings of its flagship banking unit, despite the dark business outlook, given less aggressive monetary policy tightening and higher default rates.

Woori Financial Group on Monday said its net profit rose by 8.6% to 911.3 billion won ($684.7 million) in the first quarter from a year earlier as Woori Bank’s net profit advanced 20% to 859.5 billion won on higher interest rates.

The group’s earnings from interest rates gained 11.6% to 2.2 trillion won during the January-March period with its net interest margin – a measurement comparing the net interest income a financial firm generates from credit products like loans and mortgage – up to 1.65% from 1.49% in the same three months of 2022.

That came as the central bank raised its policy interest rate to 3.50% in the first quarter from 1.25% a year earlier. The Bank of Korea is expected to keep the base rate in 2023, however, as Asia’s fourth-largest economy is unlikely to rebound in the second half, a survey of 50 economists and financial experts by The Korea Economic Daily showed earlier this month.

MORE PROVISIONS

Woori Financial Group’s financial soundness indicators slightly deteriorated.

Its non-performing loans, which are overdue for more than three months, accounted for 0.35% of total lending in the first three months of this year, up from 0.29% from a year earlier.

Woori Bank’s delinquency ratio rose to 0.28% from 0.19% during the period.

That prompted the group to ramp up credit loss provisions by 57.4% to 261.4 billion won.

“The provisions are manageable enough within the group’s financial plans,” said a group official.

Write to Eui-Jin Jeong at justin@hankyung.com
 
Jongwoo Cheon edited this article.