Foreign banks falter here in 2016

By Nam Hyun-woo

Foreign bank branches in Korea saw their bottom lines decrease significantly last year, according to the country’s financial watchdog on Tuesday, countering the long-held belief that Korea is a lucrative market for global banks.

According to data from the Financial Supervisory Service (FSS), Tuesday, branches of 27 foreign banks here reported preliminary net profits of 764.9 billion won ($665.94 million) in 2016, down 31.8 percent from the year before.

Their aggregate assets also declined 2.4 percent year-on-year to 264.3 trillion won at the end of 2016.

The FSS attributed the downturn to their lower interest incomes. At the end of last year, the income from interest stood at 1.11 trillion won, down 26.2 percent from 2015.

“The decline was caused by foreign banks’ revision in their interest rate policies amid rising concerns about the uncertainties of the global financial market,”an FSS official said. “That had adverse impacts on the performance of their branches in Korea.”

The branches also struggled with making money from their securities businesses. The branches suffered a 4.1 billion won loss in securities-related businesses last year. Their trading commissions headed down and so did their valuation gains, the financial watchdog said.

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