Net Income of the First Half of the Year of KRW 4 Trillion 32% Increase

Domestic banks have accumulated the bad debt reserves, the net profits as of the first half of the year increased by 31.6% over the same period of the last year. The average rate of NPL has reached to 2% for the first time. Some banks show the average NPL rate of1% which is the level of the best bank in the world.

According to Financial Supervisory Commission on July 19, total net income of 20 domestic banks as of the first half of the year amounted to KRW 4,089.9 billion increased by 31.6% over KRW 3,105.6 billion as of the first half of the last year.

However, the net income of the second quarter (April ~ June) was KRW 1,786.6 billion decreased by 22.5% over KRW 2,303.3 billion of the first quarter (Jan. ~ Mar.). It is because the business performance showed a favorable tendency but the bad debt reserve on the household loans has been accumulated more than the first quarter according to a guideline of Financial Supervisory Commission.

As most of banks have accumulated the bad debt reserve on Hynix loans and the stock market has been depressed in the second quarter, the profits related marketable securities decreased a little.

As of the end of June, the NPL rate of domestic banks decreased to 2.4% over 3.1% of the end of March. The NPL rate sharply decreased to 3.4% at the end of last year from 8.0% of the end of 2000. Shinhan Bank(1.49%) and KorAm Bank(1.50%) showed the NPL rate of 1% in the first half of the year for the first time.

Dong-Won Kim daviskim@donga.com