Posted on : May.4,2006 07:34 KST Modified on : May.14,2006 18:34 KST

South Korean lenders posted healthy profits for the first quarter of this year, on the back of fewer provisions for bad loans amid a recovery in domestic demand.

Kookmin Bank recently announced that it posted 803 billion won (854 million USD) in net profit for the first quarter of this year.

The first-quarter net income was higher than the general market expectation of about 500 billion won and represented a 136-percent jump from the same period a year ago.

The sharp rise in Kookmin Bank’s net profit was mainly due to fewer provisions for bad loans, coupled with a rise in interest profits and higher fee income from equity and other sales.

During the first quarter, Kookmin Bank’s provisions set aside for bad loans fell more than 60 percent from a year earlier to 143.6 billion won.

“Unless something bad happens by the end of this year, the profit parade will go on,” said Yeo Won-sik, vice president of Kookmin Bank. “But, profits may fall this year because of margin-crushing competition among lenders.”

Last year, Kookmin Bank posted its biggest-ever net profit of 2 trillion won. If results of the remaining three quarters of this year are similar to those of the first quarter, Kookmin Bank could post nearly 3 trillion won in net profit this year.

Woori Bank, majority owned by the state-run Korea Deposit Insurance Corp., reported 354.6 billion won in net profit for the first quarter, up 1 percent from a year ago. First-quarter net income for Woori Finance Holdings Co. jumped 21.6 percent from a year earlier to 440.1 billion won. Woori Bank is a lending unit of Woori Finance Holdings.

"If we subtract one-time gains such as equity investment profits in the first-quarter of last year, it may lead to more than 20 percent gain in quarterly profit," Woori Bank said.

Korea Exchange Bank, a lender being sold by Lone Star Funds to Kookmin Bank, reported a 299.8 billion won in net income for the first quarter. That was a 8-percent fall from a year ago, but was a 26.8-percent increase in terms of pre-tax profit basis.

Hana Bank posted a 306.8 billion won in net profit, helped by an increase in interest and non-interest profits and fewer provisions.

Kim Seong-jae, seong68@hani.co.kr

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