The savings banking industry achieved a net profit of 765.8 billion won in

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The savings banking industry achieved a net profit of 765.8 billion won in the first half of this year, the highest half-year performance in four years. However, the main reason for the expansion of the surplus was the increase in the return on investment in securities and the reduction of the burden of provision for bad debts. Interest income from loan operations remained around 2.7 trillion won, similar to the same period last year.

The Financial Supervisory Service and the Korea Federation of Savings Banks announced the “business performance of savings banks and mutual financial associations in the first half of 2026” on the 28th. 79 savings banks suffered a decline in their earnings after losing 96.5 billion won and 380.4 billion won in the first half of 2023 and 2024, respectively, after the first half of 2022 (899.1 billion won), and succeeded in turning into a surplus in the first half of last year. This year, the surplus has grown significantly.

In a year, profits from investing in securities such as bonds and funds increased by 401.2 billion won, and bad debt costs decreased by 260.8 billion won as bad loans were cleared. Due to the preemptive accumulation of a large amount of provisions, the amount of additional provisions to be accumulated in the first half of this year has decreased relatively. In fact, savings banks’ transfer of provisions in the first half of the year was 1.3942 trillion won, down 15.8% from a year ago.

On the other hand, interest income in the first half of the year was KRW 2.7326 trillion, up only 0.9% from KRW 2.7072 trillion a year earlier. Even so, loan interest income decreased by 7% compared to the same period last year, but interest income was maintained as interest expenses paid for deposits and other procurement decreased by 19%.

It is not easy for the savings banking industry to increase profits significantly through loans. In June last year, the loan business itself shrank as the credit loan limit was limited to within annual income due to the June 27 loan regulation, and the ability of savings bank borrowers to repay is also falling as the economic recession continues. Amid poor loan business conditions, savings banks are defending interest profits by increasing private mid-interest loans. Savings banks’ balance of private mid-interest loans amounted to 18.2 trillion won, up 600 billion won from the end of last year. The delinquency rate of the business sector was 6.26 percent as of the end of June, up 0.22 percentage point from the end of last year (6.04 percent).

An FSS official said, “As economic uncertainties at home and abroad still exist in the second half of the year, we will induce the improvement of soundness by liquidating bad assets such as hard currency, short sale, and autonomous sale.”