Bank net income for the first half of 2007 totaled KRW9.92 trillion, up KRW1.88 trillion from KRW8.04 trillion a year earlier. Bank income for the first half of the year was helped by after-tax gains totaling KRW3.1 trillion from the sale of domestic banks’ equity stakes in LG Card (KRW2.9 trillion) and SK Networks (KRW200 billion). Excluding these gains, net income for the period totaled KRW6.8 trillion, compared with KRW7.2 trillion a year earlier.

Whereas interest income rose 4.1% from KRW14.6 trillion to KRW15.2 trillion, non-interest income nearly doubled from KRW4.1 trillion to KRW8.1 trillion in the first half of the year on increased revenues from service fees and securities gains. Service fee income—including income from money transfer services, ATM and bancassurance sales—totaled KRW2.24 trillion, up from KRW1.94 trillion a year earlier.

ROA for the first half of the year averaged 1.52%, compared with 1.41% a year earlier, but excluding the one-time gains realized from the sale of shares from debt-to-equity swaps ROA drops to 1.05%, lower than 1.25% for H1, 2006.

The so-called structural profitability—a measures of profitability defined as bank income which is generated from operational activities and is both sustainable and recurring (Framework for the Assessment of Bank Earnings, BIS, 2002)—came to 1.47%, down from 1.62% a year earlier. A drop in net interest margin was the key factor for the lower profitability.

* Please refer to the attached PDF for details.