Here are a few key takeaways from South Korea’s top banks (Industrial Bank of Korea, Woori Financial Group, Hana Bank, Shinhan Bank and KB Kookmin Bank) in Q2 FY-2024, with a dash of insight.

Revenue Analysis

In Q2 FY-2024, South Korea's leading banks—Industrial Bank of Korea (IBK), Woori Financial Group, Hana Bank, Shinhan Bank, and KB Kookmin Bank experienced a collective net revenue decline of 12.20% YoY, decreasing from USD 11.7 billion in FY-2023 to USD 10.9 billion.

Industrial Bank of Korea (IBK)

IBK reported the most significant drop among its peers with a 16.25% YoY decrease in net revenue from USD 3.8 billion in FY-2023 to USD 3.2 billion in FY-2024.

• Non-interest Income plummeted by 46.93% YoY from USD 70.96 million to USD 37.66 million.

• Interest Income decreased by 13.97% YoY from USD 1.5 billion to USD 1.3 billion.

The sharp decline in IBK's revenues is primarily due to reduced profitability from trading and investment activities and lower fees and commissions.

The overall revenue declines highlight the challenging operating environment for South Korean banks, with IBK particularly vulnerable due to its reliance on trading activities and fee-based income streams.

Profitability Analysis

In Q2 FY-2024, the net profits of South Korea's leading banks saw a modest increase of 0.62% YoY, rising from USD 4.1 billion in FY-2023 to USD 4.13 billion.

Woori Financial Group achieved the highest increase in net profit among its peers, with a substantial rise of 26.07% YoY from USD 533.6 million in FY-2023 to USD 672.7 million in FY-2024.

• This impressive growth is primarily driven by a significant rise in fee revenue, reflecting enhanced income from banking services.

• Additionally, a decrease in fee expenses has contributed to lower operational costs.

While most banks reported an uptick in their net profits for Q2 FY-2024, Hana Bank and Industrial Bank of Korea were exceptions with a decline of 1.45% and 12.26% respectively.

Fee-based Income Analysis

In Q2 FY-2024, fee incomes for South Korea's leading banks declined by 6.77% YoY, falling from USD 1.6 billion in FY-2023 to USD 1.5 billion.

However, Woori Financial Group was the sole bank to report an increase in fee income, with a rise of 2.61% YoY from USD 176 million in FY-2023 to USD 180.6 million in FY-2024.

The positive performance by Woori Financial Group underscores the significant returns on their strategic investments, which have contributed substantially to their overall growth trajectory.

South Korea's leading banks in Q2 FY-2024 show a mixed performance, with revenue declines but modest profitability gains. Industrial Bank of Korea faces significant challenges, while Woori Financial Group benefits from strategic investments. Adaptive strategies and operational optimization will be crucial for these institutions to achieve sustained growth and resilience amidst evolving market conditions.

‍