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Local companies are reporting mixed results with an ecnomic recovery still gathering steam.
May 09, 2009
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| Korea Exchange Bank, the lender Lone Star Funds is seeking to sell, reported an unexpected loss as loan profitability declined. The deficit of 74.8 billion won ($59 million) for the three months ended March 31 compared with a profit of 267.4 billion won a year earlier, the Seoul-based bank said yesterday in a regulatory filing. KEB, which last posted a loss in the fourth quarter of 2003, and its local rivals are struggling to combat shrinking lending margins as the interest rates they charge on loans fall. “The outlook for bank earnings is gloomy through next year,” said Lee Young-seog, an asset manager at Korea Investment Trust Management Co. “KEB’s profit slump isn’t helping Lone Star’s efforts to sell the bank.” “We expect to post a surplus in the second quarter helped by pre-emptive risk management, net interest income improvement and cost saving,” KEB said in a statement. The bank’s net interest margin, a measure of profitability from lending, fell 64 basis points to 2.18 percent from three months earlier. Earnings at KEB were also dragged lower by loan-loss provisions, which rose to 325 billion won from 80 billion won a year earlier. Still, KEB’s shares closed 6.4 percent higher in Seoul, after Edaily reported that Korea Development Bank is interested in buying the lender. Separately, Citibank Korea said yesterday its Q1 earnings slumped 22.4 percent due to higher loan-loss reserves. Net income stood at 116.3 billion won in the January-March quarter, compared with 149.8 billion won for the same period last year, the lender said. Bloomberg, Yonhap |
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