Chairman Kim Yong-hwan of NH Financial Group.

NH Financial Group posted net profit of 182.7 billion won in the third quarter, up 3 percent year-on-year, but when the fees for using the name to the National Agricultural Cooperatives Federation (NACF) are included, its Q3 net profit jumps to 248 billion won.

The fees that the affiliates of the financial group pay every quarter are the funds those companies contribute to help the agricultural sector, including farmers around the country. The group’s net profit for the three quarters of the year came to 619.7 billion won, down 11.8 percent year-on-year. But net profit was actually up 83.6 percent if the price (365.5 billion won) the group paid to take over Woori Investment and Securities last year is counted in the net profit of the group so far this year.

"The on-year gain was possible because many firms under the group posted net profits and the group as a whole cut back on bad debt reserves," it said. This, it said, offset the drop in non-interest rate earnings, and a one-off rise in sales and managerial expenses.

The group's return on assets stood at 0.26 and return on equity hit 3.9 percent. These numbers represent a 0.09 percentage point and 1.48 percentage point improvement, respectively, from the third quarter of last year.

The group said third quarter earnings for Nonghyup Life Insurance rose 7.2 percent on-year to 41.8 billion won.

NH Investment and Securities Co., Nonghyup Property and Casualty Insurance Co, NH Capital Corp., and NH Savings Bank all posted net profits in the third quarter. 

On the downside, the net earnings of its key affiliate and banking arm, Nonghyup Bank, plunged 18 percent to 130.8 billion won. 

The group, however, said in terms of risk management, the banking arm did relatively well. The bank's non-performing loan ratio fell 0.12 percentage point from a year earlier to 1.49 percent, with its loan delinquency ratio fell 0.15 percentage point to 0.79 percent.

Nonghyup Financial, meanwhile, said its total assets stood at 333.1 trillion won in the three-month period, up 17.4 trillion compared to late last year.

The group said every effort will be made to reach annual net profit of 905 billion by the end of 2015. In the nine months of this year the financial group's net earnings stood at 619.7 billion won.

NH Financial kicked off its operation for the first time in 2012, but its roots go back to 1961 when its precursor, the National Agricultural Cooperative Federation — or NongHyup — was created to protect the wellbeing of farmers and promote the agricultural industry.

Following NongHyup’s decision to spin off its credit business, NH Financial was born in 2012 as a financial holding company handling banking, insurance, futures, securities and asset management. 

Since then, NH Financial has been steadily expanding in size and scope, but few expected that it could take over Woori’s brokerage houses.

Upon completing the 1 trillion won ($966 million) acquisition in June, NH not only became the country’s fourth-largest financial group, but it now controls Korea‘s largest brokerage unit. NH Financial’s assets are likely to grow to 290 trillion won in the near future, according to industry estimates earlier this year, to trail on the heels of KB Financial Group and Hana Financial Group, which hold assets of 296 trillion won and 295 trillion won, respectively. 

Citing the growth potential, the group chairman said he expects NH Financial to grow into one of the nation’s most dominant financial groups by 2020. 

To achieve this goal, Yim has pledged to increase the group’s total assets to 420 trillion won, and to raise the proportion of non-banking businesses to 4 percent of the company’s portfolio. 

Yim also promised that NH would focus on devising long-term strategies and refrain from interfering in affiliates.

A view of the National Agricultural Cooperatives Federation(NACF)building in Seoul where the financial group has offices.(Photos:NACF)