NongHyup Financial Group Inc. said on Oct. 26 that its third-quarter earnings increased nearly 3 percent on-year thanks to strong revenue and less money set aside to cover bad debt.
Net profit reached 182.7 billion won ($162.2 million) in the July-September period, up 2.7 percent from a year earlier, NongHyup Financial said in a press release. The group recovered from losses amounting to nearly 300 billion won in the preceding quarter due to loans provided to shipbuilding and shipping firms going sour in the quarter.
"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 one-off rise in sales and managerial expenses. The group said its net profit in Q3 amounted to nearly 300 billion won, erasing the 290.7 billion won net loss suffered in the preceding quarter and bringing net profit for the first three quarters of this year to 98.7 billion won. The excellent results have been owed to the cuts in the loss provision in Q3, down to 100.8 billion won, a plunge of nearly 90 percent from 1.14 trillion won in the preceding quarter. Officials of the group said both interest and non-interest income, except loss provisions, have been doing good enough to erase the deficits.
“We will try to expand the interest earnings and continue to keep the health of the assets well through the remainder of this year,” the group said in the statement.
The group's return on assets stood at 0.26 and return on equity hitting 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 falling 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.
The rise of NH Financial Group to the nation’s fourth-largest financial group has not only reshaped the local financial landscape, but also wowed critics who had been skeptical of whether it was capable of such a feat. In the recent process of acquiring Woori Investment & Securities, Woori Aviva Life Insurance and Woori Savings Bank, the group has beaten Woori Financial Group in terms of assets.
“NH Financial is now ready to compete with the industry’s top players,” said Yim Jong-yong, the then-NH Financial Group chairman who now is the chairman of the Financial Services Commission. Despite the rise to stardom, NH stresses that the company will always stand out from its peers due to its roots in the agricultural sector.
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