Hana Financial swings to loss in Q1

(ATTN: ADDS more details in para 5,7-13)
SEOUL, April 24 (Yonhap) -- Hana Financial Group Inc., South Korea's No. 4
financial services company, said Friday it swung to a loss in the first quarter
on higher loan-loss reserves.
Net loss amounted to 325 billion won (US$242 million) in the January-March
period, a turnaround from a net profit of 234.7 billion won the previous year,
the group said in a regulatory filing.
Sales jumped 100.9 percent on-year to 12.3 trillion won while operating loss came
to 418.1 billion won, it added.
Shares of the group closed up 3.28 percent at 22,050 won on the main bourse,
despite the red ink that was in line with a market consensus. The results came
after the stock market closed.
"The deficit came as we put aside 193.6 billion won in additional reserves to
cover losses related to the collapse of Taesan LCD Co. and one-off expenses and
investment losses were booked," a group official said.
Hana Group suffered losses after Taesan LCD, a local maker of parts used for
computer screens, collapsed due to losses from currency options contracts. The
won's sharp weakness prompted the company to incur heavy losses, dealing a blow
to Hana Group's balance sheets.
Hana Financial Group's total assets reached 161 trillion won as of the end of
March, up from 157.8 trillion won three months earlier.
The group's profitability and financial health were dented amid the slowing
economy, reflecting challenges facing local banks.
Hana Bank, the group's flagship unit, reported a net loss of 304.5 billion won
last quarter, compared with a profit of 223.7 billion won a year earlier, the
group said.
The lender's net interest margin, a key barometer of profitability, reached 1.6
percent in the first quarter, down from 1.93 percent three months earlier.
Its capital adequacy ratio, a key gauge of financial health, rose to 13.8 percent
from 13.5 percent in the preceding quarter as the lender tapped the country's 20
trillion won bank recapitalization fund.
But its loan delinquency rate is on the rise as the slowing economy is increasing
the amount of bad debts. The lender's loan default rate came in at 1.37 percent
as of the end of March, up from 0.86 percent at the end of last year.
Meanwhile, the group decided to spin off a card business from its banking unit in
a bid to beef up its non-banking sector.
sooyeon@yna.co.kr
(END)