South Korean Bank Profits Climb 18 Percent in 2025
(MENAFN) South Korea's banking sector saw its combined net profit jump by 18.4% in the first half of 2025, driven by a sharp rise in non-interest earnings, data from the Financial Supervisory Service revealed on Thursday.
Domestic banks posted a total net income of 14.9 trillion won (approximately 10.7 billion U.S. dollars) between January and June, marking a double-digit increase compared to the same period last year, despite a marginal decline in traditional lending revenue.
Interest income dipped slightly by 0.4% to 29.7 trillion won, as net interest margins narrowed to 1.52%, down 0.09 percentage points. This came even as interest-bearing assets expanded 4.7% during the period.
The decline in margins followed a series of benchmark rate cuts by the central bank. It lowered rates by 25 basis points each in February and May, after similar reductions in October and November last year, bringing the policy rate down to 2.50%.
Meanwhile, non-interest income surged 53.1% to 5.2 trillion won, bolstered by gains from securities trading and foreign exchange derivatives.
Banks also faced mounting challenges. Loan-loss provisions soared 23.3% to 3.2 trillion won amid growing fears of a potential economic downturn.
Profitability indicators improved despite these headwinds. Return on assets rose by 0.08 percentage points to 0.75%, while return on equity increased 1.08 percentage points to 10.18%.
(1 won equals 0.00072 U.S. dollars)
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