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South Korean banks posted their first combined loss in eight years in the final quarter of 2008, as the global financial crisis drove up bad loan charges and increased funding costs, a regulator said on Tuesday.
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CNBC.com |
The South Korean economy suffered its second-biggest contraction on record in the last quarter of 2008, with the global recession cutting demand for emerging-market products and sending small manufacturers into collapse.
Domestic banks, led by KB Financial Group's Kookmin Bank, racked up total losses of 300 billion won ($216 million) for the October-December period last year, the Financial Supervisory Service (FSS) said.
That marked the sector's first shortfall since a whopping 4.6 trillion won loss in the last quarter of 2000, when South Korean lenders were required to write off all losses before public funds bailed them out.
Banks booked additional provisioning charges for shipbuilders and construction firms picked for restructuring last month, Jaeseong Joo, head of the FSS's banking service division, told a briefing.
For the whole of 2008, earnings at South Korean lenders almost halved to 7.9 trillion won against 15.0 trillion won a year ago, the regulatory agency said in a statement.
Provisioning costs against soured loans more than doubled to 9.9 trillion won, cutting into a 9-percent rise in interest income of a combined 34 trillion won.
The sector's net interest margin, a key profitability measure, fell by 15 basis points to 2.29 percent from a year ago, with sluggish stock markets slashing securities-related income by half.
Shinhan Financial Group, South Korea's top financial holding company, reported a below-forecast net profit on Monday, and disclosed plans to raise $1.2 billion from a new share issue this month to shore up its financial base.
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