Cumulative net profit for top four financial groups exceeds W17tn in Q3, with KB and Shinhan posting double-digit growth
Some banks trim preferential rates despite cuts to spread rates, leaving borrowers facing persistent high costs
South Korea’s top four domestic financial holding companies generated nearly 34 trillion won ($24.4 billion) in interest income through the third quarter of this year, pushing net profit past the 17 trillion won mark. Even as these financial groups stepped up dividends and share buybacks, household borrowing rates crept toward 5% annually. Controversies have also mounted over the actual impact of measures designed to lower loan rates, as some banks slashed preferential rates by a wider margin than they cut spread rates.
According to industry data, KB, Shinhan, Hana, and Woori Financial Groups recorded a combined cumulative net interest income of 33.8537 trillion won and net profit attributable to controlling shareholders of 17.1019 trillion won for the first nine months of 2026. Cumulative net profit rose 8.2% from the same period a year earlier.
Financial Giants Amass W34 Trillion in Interest Income as Net Profit Exceeds W17 Trillion
Among the big four, KB Financial Group posted the largest net profit, reaching 5.7921 trillion won for the first three quarters—a 13.1% increase year-on-year. Shinhan Financial Group reported a 12.7% increase to 5.0274 trillion won, crossing the 5 trillion won threshold for cumulative third-quarter net profit for the first time.
Hana Financial Group saw its net profit grow 5.6% to 3.6243 trillion won. While Woori Financial Group reported a 4.9% decline to 2.6581 trillion won, it noted that excluding one-off gains from last year’s acquisition of an insurance affiliate, its underlying net profit actually rose 18.7%.
Net interest income stood at 9.9853 trillion won for KB Financial, 9.3493 trillion won for Shinhan Financial, 7.4832 trillion won for Hana Financial, and 7.0359 trillion won for Woori Financial. All four groups registered increases compared to the same period last year.
Provisions set aside for potential bad debts also influenced earnings performance. Hana Financial’s operating profit before loan-loss provisions rose 10.2%, outpacing Shinhan Financial (7.5%). However, due to heavier provisioning burdens and a higher effective tax rate, Hana’s final net profit growth was limited to 5.6%. Meanwhile, provisions for credit losses at KB Financial and Shinhan Financial decreased by 5.9% and 4.5%, respectively.
Expanded Shareholder Returns Amid Controversy Over Slashed Preferential Rates
Bolstered by solid earnings, the financial holding groups expanded shareholder returns. KB Financial declared a third-quarter cash dividend of 1,167 won per share, while Shinhan Financial announced a dividend of 740 won per share alongside a 450 billion won share buyback. Hana Financial pursued a dividend of 1,165 won per share and a 250 billion won share buyback and cancellation. Woori Financial’s quarterly dividend was set at 220 won per share.
In contrast, household loan rates remain on an upward trajectory. According to the Bank of Korea, the average interest rate on household loans newly extended by deposit-taking banks rose to 4.96% per annum in September, climbing for the fifth consecutive month. Mortgage rates hit 4.88% per annum, the highest level in 14 years and 5 months, while fixed-rate mortgages topped the 5% mark at 5.11% per annum.
Doubts persist over the effectiveness of regulatory revisions intended to lower borrowing costs. On July 1, an amendment to the Banking Act took effect, barring banks from factoring certain statutory contributions into their loan spread rates. However, data showed that some banks lowered their spread rates while simultaneously imposing deeper cuts on preferential rates.
According to disclosures by the Korea Federation of Banks, KB Kookmin Bank lowered its spread rate from 3.42% to 3.34% between June and August, but scaled back its preferential rate from 1.96% to 1.65%. NH NongHyup Bank similarly trimmed its spread rate by 0.26 percentage points while cutting preferential rates by 0.61 percentage points over the same period.
During a parliamentary audit by the National Policy Committee last month, opposition Democratic Party lawmaker Min Byung-duk criticized these rate adjustments for undermining the legislative intent of the law. The bank chief executives in attendance responded that they would review the detailed pricing calculations and report back.
The banking sector explained that tighter household debt management has led to a decline in the issuance of mortgages with steep preferential rates, thereby shrinking the average discount margin. Indeed, the interest rate gap between new loans and deposits stood at 1.12 percentage points in September, down 0.07 percentage points from the previous month, indicating that surging interest income cannot be entirely attributed to widening net interest margins (NIM).
Nevertheless, the average interest rate on newly issued household loans climbed 0.53 percentage points from 4.43% in April to 4.96% in September. A simple calculation shows that a 0.5-percentage-point hike on a 300 million won loan balance increases annual interest payments by 1.5 million won. Questions remain over how much tangible relief regulatory interventions have truly delivered to borrowers, even as financial holding groups return massive profits to their shareholders.
