South Korean Banks' Net Profits Decline in First Half of 2026
Interest income hits record high despite sharp drop in non-interest earnings
Quick Look
- South Korean banks reported a 6.4% decline in net profit to 13.8 trillion won for the first half of 2026.
- While interest income reached a record 32.2 trillion won, non-interest income plummeted 43.4% due to KOSPI-related losses amid rising interest rates.
AI-generated summary
Why It Matters
The Financial Supervisory Service monitors bank performance and fiscal soundness in South Korea. Recent market volatility has impacted non-interest income streams for major financial institutions.
SEOUL, Aug. 23 (Yonhap) -- Net profits of South Korean banks fell in the first half of 2026, due mainly to a fall in non-interest income, while their interest income recorded the highest six-month figure on record, data showed Sunday.
The combined net income of 20 banks came to 13.8 trillion won (US$9.95 billion) in the January-June period, down 6.4 percent from the same period a year earlier, according to the data from the Financial Supervisory Service (FSS).
Their interest income came to 32.2 trillion won in the first half, up 8.3 percent on-year.
Non-interest income came to 2.9 trillion won, sharply falling by 43.4 percent from the same period a year earlier, according to the FSS.
The drop in non-interest income was blamed on a fall in profits related to the benchmark KOSPI market, amid a rise in interest rates, the FSS said. Profits related to the KOSPI swung to the red in the first half, generating a deficit of 2.5 trillion won.
The FSS said external uncertainties, such as the Middle East war, and increasing delinquency rates could pose a burden on the fiscal soundness of banks, as it vowed to strengthen monitoring and encourage banks to take measures to expand their loss-absorption capacities.
Open Questions
- What specific measures will banks take to improve loss-absorption?
- Will delinquency rates continue to rise in the second half of 2026?
