Following Woori Bank that reported stronger-than-expected earnings for the third quarter a day earlier, Shinhan Financial Group Inc. and KB Financial Group Inc. on Thursday reported earnings that also beat market expectations for the quarter despite a record-low interest rate that could have hurt margin at their banking units.

Shinhan Financial Group said in a regulatory filing that it raked in 707.9 billion won ($627.8 million) in net income for the July - September period on a consolidated basis, up 4.3 percent on year and 3.6 percent on quarter. The figure also came well above the market expectations of 607.7 billion won surveyed by Korea’s market data provider FnGuide. It was the first time in six years that Shinhan Financial Group’ net profit for the third quarter topped 700 billion won.

Backed by the robust earnings, its net income in the first nine months totaled 2.16 trillion won, up 10.2 percent on year and breaking the 2 trillion won-threshold for the first time since 2012.

The stellar performance much owes to a fall in loan loss reserves set aside for exposures to bad debts from shipbuilders and shippers under restructuring process in the first half, as well as solid performances of non-banking units such as Shinhan Card Co. and Shinhan Life Insurance Co., said a company official. Shinhan Card’s cumulative net profit in the nine months of this year rose 2.1 percent from a year ago to 532.6 billion won. Shinhan Life Insurance reaped 127.6 billion won in net income, up 44.4 percent on year.

Korea’s another leading financial group KB Financial Group also reported upbeat earnings for the three months ended September, posting 564.4 billion won in net profit, which is 36.2 percent higher from 414.5 billion won a year ago. Its cumulative net income for the first nine months of this year reached 1.69 trillion won, up 25.1 percent from a year ago.

Despite the lower key interest rate, the net interest margin (NIM) of the group and the banking unit, respectively, remained unchanged at 1.85 percent and 1.58 percent in the third quarter from the previous quarter, thanks to improved business portfolios focusing on banking deposits and good-credit loans.

The group’s largest affiliate KB Kookmin Bank largely contributed to the group’s brisk earnings growth, with the bank’s third-quarter net income surging 80.6 percent on year to 421.8 billion won.

By Kim Tae-sung and Park Yoon-ye

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]