Net profit at domestic branches of foreign banks fell last year from a year earlier.
According to the Financial Supervisory Service on the 24th, net income for 2025 at 32 foreign bank branches, excluding UBS (formerly Credit Suisse), was 1.6773 trillion won, down 102.8 billion won (5.8%) from 1.7801 trillion won a year earlier. Total assets (average balance) of the foreign bank branches were 450.1 trillion won, and return on assets (ROA) was tallied at 0.37%.
Interest income was 913.7 billion won, down 45.1 billion won (4.7%) from a year earlier. With high foreign currency funding costs persisting under the U.S. dollar high-rate stance while yields on holdings such as Treasury bonds fell further, net interest margin (NIM) declined.
In detail, interest revenue was 7.7574 trillion won, down 654 billion won (7.8%) from a year earlier. Of that, interest on securities was 2.5558 trillion won, up 112.6 billion won (4.6%), but interest on loans was 4.1391 trillion won, down 766.9 billion won (15.6%). Interest expense was 6.8437 trillion won, down 608.9 billion won (8.2%) from a year earlier. Noninterest income was 2.4909 trillion won, down 49.6 billion won (2.0%) from a year earlier. Although foreign exchange and derivatives-related gains rose sharply, losses related to securities occurred.
Securities gains swung from a 427.9 billion won profit in 2024 to a 544.8 billion won loss last year. Compared with the previous year, that was a decrease of 972.7 billion won (227.3%). The Financial Supervisory Service explained that, as Treasury yields jumped at year-end, mark-to-market losses on securities of 452.1 billion won were incurred.
By contrast, foreign exchange and derivatives-related gains were 3.1942 trillion won, up 961.3 billion won (43.1%) from a year earlier. The increase was driven by a sharp rise in foreign exchange-related gains due to a decline in the exchange rate. Foreign exchange-related gains were 1.7738 trillion won, up 8.0076 trillion won from a year earlier, while derivatives-related gains were 1.4204 trillion won, down 7.0463 trillion won.
Expense burdens also expanded. Selling and administrative expenses were 1.1561 trillion won, up 55.9 billion won (5.1%) from a year earlier. Labor costs rose by 21.9 billion won (4.34%) from 504.4 billion won in 2024 to 526.3 billion won in 2025. Provisions also increased to 40.5 billion won, up 5.8 billion won (16.8%) from a year earlier.
The Financial Supervisory Service said that, as financial market volatility has surged due to a recent compound shock from the Middle East, it will conduct ongoing monitoring of foreign bank branches' shifts in business strategy, funding and investment, and liquidity. It also plans to carry out risk-based, tailored examinations focusing on risk factors and internal controls at each foreign bank branch and whether financial regulations have been violated.