IBK Industrial Bank of Korea (024110.KS) posted a 4.4% decline in first-half net profit from a year earlier, hit by a surge in the won-dollar exchange rate stemming from the U.S.-Iran war.
The bank said on the 27th that its consolidated net profit for the first half of this year came to 1.4429 trillion won, down 4.4% from 1.5086 trillion won in the same period last year. Second-quarter net profit was 689.5 billion won, down 0.7% from 694.4 billion won a year earlier.
While interest income rose, worsening foreign-exchange-related gains and losses driven by currency volatility led to a decline in non-interest income. First-half interest income reached 4.0763 trillion won, up 7.2% from 3.8035 trillion won in the same period last year. Non-interest income, by contrast, fell 49.8% to 243.9 billion won from 485.6 billion won a year earlier. A base effect also came into play, as non-interest income in the first half of last year had surged 205.2% from the previous year.
"Although interest income improved and gains and losses related to securities also got better, net profit fell slightly from a year earlier due to expanded valuation losses on foreign currency assets amid the surge in the exchange rate and an increase in loan-loss provisions," a bank official said.
As of the end of June, the balance of loans to small and medium-sized enterprises stood at 270.001 trillion won, up 3.1% from the end of last year. Over the same period, household loans decreased by 64 billion won, from 43.294 trillion won to 43.23 trillion won.
The total delinquency rate stood at 0.94% at the end of June, lower than 0.95% at the end of March but 0.05 percentage points higher than 0.89% at the end of last year. The delinquency rate on corporate loans was 0.98%, up 0.07 percentage points from 0.91% at the end of last year. In particular, the delinquency rate for the real estate and leasing sector jumped 0.67 percentage points, from 0.87% at the end of last year to 1.54% at the end of June.
The ratio of substandard and below loans was 1.27%, down 0.01 percentage points from both the end of last year and the previous quarter. Compared with the same period last year, it fell 0.10 percentage points.
Along with its second-quarter earnings announcement, IBK Industrial Bank will pay a quarterly dividend for the first time since its founding. The dividend record date is the 31st of this month, and the dividend is 210 won per share. "Through an organizational restructuring in the second half, we have secured the momentum to support productive finance and drive a major AI transformation," a bank official said. "We plan to further strengthen shareholder returns through our first-ever quarterly dividend."
