Foreign banks' 2008 earnings rise five fold

SEOUL, Feb. 23 (Yonhap) -- Foreign bank branches in South Korea saw their
earnings rise more than five fold last year on higher interest income and
investment gains, the nation's financial watchdog said Monday.

The combined net profit of 53 foreign bank branches reached 2.1 trillion won
(US$1.39 billion) in 2008, up 425 percent from the previous year, according to
the Financial Supervisory Service (FSS).
"Interest income rose as loans grew and overseas funding costs decreased," the
FSS said. "Securities-related income also increased as falling returns on
treasury bonds boosted gains in valuation of their bond holdings and
profit-taking."
Foreign bank branches invested in the local bond market in a bid to pursue
arbitrage profits after borrowing money from their overseas parent banks and
converting it into the won in the swap market.
Their combined interest income amounted to 1.74 trillion won in 2008, up 1.3
trillion won from the previous year, according to the watchdog.
As of the end of December, foreign bank branches' total assets reached 306.2
trillion won, up from 148.6 trillion won a year ago, it added. Their average net
interest margin, a key barometer of profitability, came in at 1.52 percent as of
end-December, up 1.09 percentage points from the previous year.
sooyeon@yna.co.kr
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