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Financial group avoids problems in building industry
July 30, 2010
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The group’s net profit is expected to be the biggest in the financial sector in the second quarter as KB Financial Group and Woori Finance Holdings were affected more by on-going corporate debt restructuring programs and problems with project financing loans in the property sector. Unlike its larger rivals, Shinhan was not a main creditor to any of the 16 construction companies that were selected recently to undergo corporate restructuring. Shinhan is less exposed to corporate debt workouts since most of its lending is to households and small businesses. Shinhan is Korea’s largest financial group by market value and its better-then-expected results could boost its share price further. Shinhan Bank, the group’s main affiliate, reported a 88 percent rise in earnings to 380.2 billion won. “The bank’s net interest margin (NIM), which significantly fell due to the global financial crisis in 2009, has recovered to the pre-crisis level,” said a group official. The NIM, which measures profit margins on lending, is expected to widen further after the central bank recently raised the benchmark interest rate. The NIM rate in the second quarter was 3.48 percent, the same as in the first quarter. The NIM rate fell from 3.42 percent in the fourth quarter of 2008 to 2.89 percent in the first quarter of 2009. The current economic recovery is likely to reduce bad loans for Shinhan, analysts say. Operating profits were up 20.5 percent from the same period last year to 769.7 billion won. Revenue in the second quarter was down 7.3 percent from a year earlier to 9.43 trillion won. By Lee Ho-jeong [ojlee82@joongang.co.kr] |
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