It was found that 32 foreign banks' domestic branches (excluding UBS) recorded a net profit of 1.78 trillion won last year. This is an increase of 224.1 billion won (14.4%) compared to the previous year.
According to the ‘2024 performance of foreign banks' domestic branches (tentative)’ announced by the Financial Supervisory Service on the 26th, the interest income of foreign banks' domestic branches decreased by 272.8 billion won (22.2%) compared to a year ago, while non-interest income increased by 667.5 billion won (35.6%).
The FSS noted, “Interest income has decreased due to the decline in net interest margin (NIM), as high levels of foreign currency funding rates continue amid a dollar high-interest trend, while the yields on Korean government bonds have fallen.”
It continued, “Non-interest income increased due to gains related to foreign exchange and derivatives, which grew by 1.2139 trillion won compared to the previous year due to increased exchange rate volatility.” However, among non-interest income, the gains from securities sharply decreased by 603.6 billion won (58.5%) compared to the previous year.
The FSS explained that despite events such as the election of U.S. President Trump and the declaration of a state of emergency causing a sharp rise in exchange rates in the fourth quarter of last year, the impact on the operations of foreign banks' branches was limited. The net profit of foreign banks' branches in the last quarter of last year was 570 billion won, which is an increase of 280 billion won compared to the same period last year.
The FSS stated regarding future supervisory directions, “We will constantly monitor changes in foreign banks' branch business strategies, funding and liquidity, and plan to conduct concentrated inspections on risks according to each bank's business model during inspections.”