London Korean Links

Covering things Korean in London and beyond since 2006

Foreign bank first half results

Korea’s foreign banks had a rosier first half of 2006, after a not too hot full year 2006, where the results were hit by poor positioning in their interest rate books – they were caught out by interest rate increases. Below are the results for the first six months, compared with the same period last year. The big winner has got to be Standard Chartered’s acquisition, First Bank.

Bank Jun 05
(Won bn)
Jun 06
(Won bn)
+ / –
Citibank Korea 258.0 226.3 -12%
SC First Bank 26.8 151.8 466%
HSBC 33.1 56.9 72%
Calyon 7.6 8.5 12%
ING 5.5 4.8 -13%
JP Morgan -2.2 0.6 127%
UBS -11.8 -6.6 44%
Total 317.0 442.3 40%

The regulator reports increasing capital adequacy ratios as a result of their good first half, though Standard Chartered’s ratio is slipping slightly presumably because of balance sheet growth.

The really depressing thing about this is that seemingly serious people in Korea are crying foul. Here’s a quote from the Korea Herald in the article accompanying the results:

Experts say foreign commercial bankers` first half performance was above expectations, and the capital market consolidation act and free trade agreements will likely spur their growth further. “Even if we were to take a more conservative approach in the FTA and the market consolidation policy, it still opens up more opportunities for foreign players,” said Shin Yong-sang, a senior researcher at Korea Institute of Finance.

“Foreign banks are equipped with more experienced financial professionals from abroad, and they are better at making and modeling structured financial vehicles. I think we need the government`s hand in the matter, possibly implementing asset caps on their branches or limiting the number of branches they may open,” he added.

The central government is spearheading the Capital Market Consolidation Act, which they expect will help local players become more competitive through exposure to open market competition.


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