(MK DB)
Shinhan Bank has become the No. 1 lender in terms of net profit in the first quarter after delivering record results.
According to financial industry sources on Sunday, Shinhan Bank posted 1.16 trillion won ($785.6 million) in net profit in the January-March period, taking the top spot among commercial banks. This marks the highest quarterly net profit in its history.
The previous quarterly record was 1.14 trillion won in the second quarter of last year, while the highest first-quarter profit stood at 1.13 trillion won, also set last year.
Hana Bank ranked second, posting net profit of 1.1 trillion won, up 11.2 percent, from a year earlier. KB Kookmin Bank, which held the leading bank title last year, slipped to third place with net profit of 1.1 trillion won in the first quarter.
The competition for the lower ranks intensified, with NH Nonghyup Bank, which had consistently ranked fifth behind Woori Bank, earning 557.7 billion won in the first quarter, overtaking Woori Bank, which posted 531.2 billion won.
Industry insiders noted that the change in rankings from first to fifth place signals a fierce battle for the leading bank position ahead.
The typical ranking within the banking sector follows the order of KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup.
This once-solid hierarchy began to shake following the large-scale losses from Hong Kong equity-linked securities (ELS) at the end of 2023.
As KB Kookmin Bank had the largest sales exposure to Hong Kong ELS products—and thus the greatest customer losses—it recorded a large provision of about 860 billion won as a loss in the first quarter of 2024, temporarily falling to last place among the five major banks.
Although the traditional ranking appeared to stabilize afterward, this year’s first quarter saw another reshuffle driven by fines and risks related to overseas operations.
Fines, in particular, weighed heavily on KB Kookmin Bank.
Following voluntary compensation two years ago, banks have had to prepare for ELS-related fines and penalties since last year.
KB Kookmin Bank faces the largest burden, having initially been notified of fines totaling 1 trillion won for ELS issues and 69.7 billion won for alleged collusion in loan-to-value (LTV) ratios.
The bank had originally planned to set aside 335 billion won—about 31.3 percent of the total fines—as provisions, but after consulting with law firms, it added another 97.6 billion won in the first quarter.
As a result, its net profit fell behind both Shinhan Bank and Hana Bank in the first quarter.
Analysts say Woori Bank’s drop behind NH Nonghyup Bank was largely due to issues involving its overseas subsidiary.
Woori Bank reflected provisions of about 100 billion won related to accounting changes at its Indonesian unit, leading to a decline in net profit of 102.9 billion won compared with a year earlier.
The market expects much fiercer competition for bank rankings this year than in previous years.
One-off factors such as fines remain significant, and the performance gap among the top three banks in the first quarter was minimal.
“Although KB Kookmin Bank has frequently held the top position recently, Shinhan and Hana also have the capacity to challenge for the lead at any time,” noted a financial industry official. “This year is likely to see an unprecedented battle for the leading bank title.”
However, there is a prevailing view that the overall rankings among financial holding groups will see little change, as the front-runner, KB Financial Group, maintains the strongest non-banking portfolio among the major groups.
The race for fourth and fifth place, on the other hand, remains difficult to predict, analysts said.
In the first quarter, NH Nonghyup Financial Group posted earnings of 868.8 billion won, surpassing Woori Financial Group, which recorded 603.8 billion won.
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