South Korean domestic banks’ earnings rose 15% in 2023

Banks are bracing for more bad loans and raised their allowance for bad debts.

South Korea’s domestic banks collectively earned $15.99b (KRW21.3t) in 2023, up 15% from a year earlier, according to data from the Financial Supervisory Service (FSS).

Interest and non-interest incomes expanded by $2.4b (KRW3.2t) and by $1.8b (KRW2.4t), respectively, which the FSS said was thanks to growing interest-bearing assets and falling market interest rates. 

Interest income grew 5.8% to about $44.44b (KRW59.2t), slower than a year ago. Non-interest income skyrocketed to a 68% rise to $4.35b (KRW5.8t) in 2023m thanks to securities-related income jumping to $3.75b (KRW5t) from around just $75m (KRW100b) previously, as market interest rates fell.

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Domestic banks also seem to be bracing for the possibility of more bad loans. Allowances for bad debts rose by KRW3.6t, which FSS said was done in order to “strengthen loss-absorbing capacity and brace for uncertainties at home and abroad.”

The aggregate loan loss expenses grew 55.6% from $4.8b (KRW6.4t) in 2022 to $7.5b (KRW10t) in 2023, the FSS reported.

(US$1 = KRW1,332.04; as of 18 March 2024, 11:31 AM)