Preliminary figures show domestic banks’ net income for the first nine months of 2006 will come to KRW11.1 trillion, compared with KRW10.5 trillion for the same period a year earlier. A drop in provisioning for loan losses and disposition of stocks from past debt-equity swaps mostly contributed to the increase. Income for the third quarter totaled KRW3.1 trillion, down from KRW4.0 trillion a year earlier.

For the January-September period, ROA averaged 1.26%. The gross income/asset ratio, a key measure of profitability, has fallen each of the three quarters in 2006, averaging 2.86% for the nine-month period, which compares unfavorably to 5.44% for the U.S. banks.

Narrower net interest margin (NIM) resulting from competition most likely contributed to the declining bank profitability. NIM averaged 2.66% for the January-September period, compared with 2.81% for the same period a year earlier.

* Please refer to the attached PDF for details.