Korea Exchange Bank Q4 net more than doubles

(ATTN: RECASTS headline, lead to highlight Q4 earnings; UPDATES more details and
share prices throughout)
SEOUL, Feb. 2 (Yonhap) -- Korea Exchange Bank (KEB), South Korea's No. 5 lender,
said Tuesday its fourth-quarter earnings more than doubled from a year earlier
due mainly to decreased loan-loss reserves.
Net income amounted to 306.4 billion won (U$264.2 million) in the
October-December period, up 159.9 percent from the previous year, the lender,
controlled by U.S. buyout fund Lone Star Funds, said in a regulatory filing. But
net income declined 27.4 percent from three months earlier due to a lack of a
one-off gain.
For the whole year of 2009, the bank's earnings increased 13.9 percent to 891.7
billion won, it added.
"The stronger bottom line came as the bank's loan-loss provisioning declined amid
the economic recovery," a bank official said.
Shares of KEB closed at 13,050 won, up 1.16 percent from the previous session.
The bank's net interest margin (NIM), a key barometer of profitability, came in
at 2.72 percent in the fourth quarter, up from 2.49 percent from three months
earlier.
Korean banks' NIMs had been under pressure as record-low benchmark interest rates
have narrowed their loan-deposit spread.
But signs of an economic recovery and expectations of a rate hike by the central
bank have begun to boost market rates like returns on certificates of deposit,
helping their profit margins improve.
In the final quarter of 2009, KEB put aside 70.3 billion won in loan-loss
reserves, down 79 percent from the previous year. In the fourth quarter, it set
aside 68 billion won in the reserves related to Kumho Asiana Group's debt
restructuring. Creditor banks of the cash-strapped Kumho Asiana Group decided on
Dec. 30 to put two other ailing units -- Kumho Industrial Co. and Kumho Tire Co.
-- under a debt rescheduling program.
The lender said it plans to pay a dividend of 510 won per common share, marking
the fourth straight yearly dividend payout. Lone Star would book a before-tax
gain of 167.8 billion won by receiving dividend and it would recoup 95 percent
out of its 2.15 trillion won investment in KEB from receiving dividends and
selling part of its stake in KEB.
The lender's bad debt ratio stood at 0.94 percent in the fourth quarter, down
from 1.25 percent the preceding quarter. The country's financial watchdog has
advised local banks to lower their bad loan ratio to around 1 percent by the end
of last year.
The bank's total assets reached 96.3 trillion won as of the end of December, down
5 percent from three months earlier, it added.
In September 2008, British banking giant HSBC Holdings Plc backed out of a $6.3
billion deal to buy a 51.02 percent stake in KEB from Lone Star Funds, citing
falling asset values amid global financial turmoil.
sooyeon@yna.co.kr
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