Kookmin profit falls on deposit rates

A slew of high yield term deposits sold by Kookmin say its net interest margin fall by half a percent in Q2 and profit slump over 60 percent.

Deriving more than 70 percent from lending, South Korean banks saw a drop in second-quarter profits due to a asset and liability maturities mismatch. KB Financial Group, Kookmin's parent company, however, is positive second-half asset growth will reach approximately 5 trillion won, putting its full-year asset expansion at 3 percent. "We expect NIM to recover to close to the first-quarter level, with high-yielding deposit products sold in the first quarter coming due," said Kim Jung-hoe, KB Financial president, in a report by Interactive Investor.

KB Financial CFO Kap Shin also said they expect the group's NIM to rebound to reach 3 percent next year. This is following Kookmin's sale of $1 billion worth of five-year covered bonds which resulted in losses worth approximately $77 million.