Kookmin Bank Q3 net jumps, beats forecasts

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Seoul, Oct 22 : South Korea’s largest lender, Kookmin Bank, posted a nine-fold jump in quarterly profit on Friday, beating market expectations, due to lower provisions for bad loans, among credit card and household customers.

South Korean banks have benefited from lower loan-loss provisions as delinquency ratios stabilised, with the reining in of new lending after the bust of a credit card boom in late 2002. The reduced costs are expected to boost earnings further in 2005.

But analysts have said a wave of maturing loans extended to struggling small businesses and possible further aid to troubled LG Card Co Ltd, could weigh on the sector. Nearly 90% of small and medium-sized enterprise debt — close to $190 billion, the equivalent of around a third of gross domestic product (GDP) in 2003 — is set to mature within the next year. “Banks made fundamental improvements as downside risks from bad debt have eased, but what matters is the top line. Growth momentum for the sector will not come until the macro economy revives,” said Kim Eun-soo, a fund manager at Nonghyup CA Asset Management. Kookmin, which counts half of South Koreans as its customers, said it earned 374.9 billion won ($328.8 million) in the third quarter ended September, beating analysts’ forecast of 252.3 billion won. It compared with a revised profit of 42 billion won a year earlier.

Kookmin said special gains from restating its 2003 and 2004 financial books helped, although some of them were offset by an increase in provisions, related to an accounting scandal that erupted last month.