Net income at South Korea’s major banks fell sharply in the fourth quarter of 2025 compared with the previous quarter, though full-year earnings still posted overall growth.
Kookmin Bank (KB), Shinhan Bank, KEB Hana Bank, and Woori Bank recorded quarter-on-quarter (QoQ) profit declines ranging from 50% to 79% in Q4, driven by lower gains from asset disposals and valuations, higher credit costs, and additional penalty provisions, CreditSights reported on 9 February 2026.
Despite the quarterly decline, the banks’ combined net income for FY2025 rose between 2% and 15% year-on-year (YoY), mainly supported by stronger non-interest income and favourable equity market performance.
Net interest income saw modest growth in Q4 and achieved double-digit increases for the full year.
CreditSights noted that the recovery in equity markets since April 2025 helped lift investment gains and commissions from investment banking, brokerage, and fund-related businesses.
However, non-interest income weakened in Q4 due to foreign exchange losses stemming from the weaker Korean won (KRW), as well as reduced disposal and valuation gains amid higher market interest rates.
Loan growth in KRW terms ranged between 4% and 5% YoY for FY2025, with Woori Bank seeing relatively softer expansion. CreditSights added that most banks missed their full-year targets due to stricter mortgage regulations and subdued corporate borrowing demand.
Looking ahead to 2026, margins are expected to stay broadly stable as the Bank of Korea is likely to keep interest rates unchanged. Loan growth, however, may continue to face pressure due to mortgage restrictions and heightened competition in corporate lending.
CreditSights also said other non-interest income will largely depend on sustained equity market strength, whilst credit costs are expected to remain steady or improve slightly.
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