[DigitalToday reporter Ji-young Lee] South Korea's four biggest financial holding groups again posted record earnings last year. They also lifted shareholder returns to record levels. KB Financial held on to the top spot, while Shinhan, Hana and Woori also extended their record run. Among major banking units, KB Kookmin Bank posted a record result and regained the title of leading bank.

The financial sector on Feb. 8 showed the four groups - KB, Shinhan, Hana and Woori - all posted record or near-record results last year, with competition expanding from earnings to shareholder returns.

Net interest income held steady in a high interest rate environment, while gains in non-interest income and improved results at non-bank affiliates drove growth.

◆KB dominates race for top spot; Shinhan and Hana chase in banking

KB Financial Group posted net profit of 5.843 trillion won last year, up 15.1 percent from a year earlier, a record. Net interest income rose 1.9 percent to 13.0731 trillion won. Non-interest income climbed 16 percent to 4.8721 trillion won. Fee income rose 6.5 percent to 4.0983 trillion won. Brokerage fee income jumped on increased stock market turnover, while strong bancassurance sales and higher trust income helped lift non-interest income.

Non-bank affiliates also contributed broadly. KB Insurance posted net profit of 778.2 billion won last year, down 7.3 percent from a year earlier, but maintained a stable earnings base and contributed 13.3 percent to group results. KB Securities, the next largest contributor, posted net profit of 673.9 billion won, up 15.1 percent. It benefited from strong domestic and overseas stock markets that boosted brokerage custody fees and valuation gains and losses on securities holdings. KB Kookmin Card posted net profit of 330.2 billion won, and KB Life Insurance posted 244.0 billion won. Non-bank contribution rose to 37 percent, up 1 percentage point from a year earlier.

KB Kookmin Bank posted net profit of 3.862 trillion won, reinforcing KB Financial's lead and taking the leading-bank title as well. Profit rose 18.6 percent from a year earlier, a record. The bank accounted for about 63 percent of the group's total profit.

Shinhan Financial Group posted 4.9716 trillion won in net profit, up 11.7 percent from a year earlier. It failed to reach the 5 trillion won mark but still posted a record. While net interest income rose 2.6 percent to 11.6945 trillion won, non-interest income increased 14.4 percent to 3.7442 trillion won. Brokerage custody fees, gains linked to securities and insurance profit all grew evenly across segments.

Shinhan Bank posted annual net profit of 3.7784 trillion won, up 2.1 percent from a year earlier, ceding the leading-bank position to KB Kookmin Bank.

Non-bank contribution rose to 29.3 percent, up 5.2 percentage points from a year earlier. Among non-bank affiliates, Shinhan Life recorded net profit of 507.7 billion won, the biggest contribution. Profit fell 3.9 percent from a year earlier due to costs for voluntary retirement and higher corporate taxes, while insurance and financial gains and losses increased. It was followed by Shinhan Card with 476.7 billion won, Shinhan Investment Corp with 381.6 billion won and Shinhan Capital with 108.3 billion won.

◆Hana tops 4 trillion won for first time; Woori holds up despite weak bank profit

Hana Financial Group posted net profit of 4.0029 trillion won last year, up 12.3 percent from a year earlier, topping 4 trillion won for the first time. Net interest income was 9.1634 trillion won. Fee income was 2.2264 trillion won, for a combined 11.3898 trillion won, up 5.2 percent from a year earlier. Non-interest income rose 14.9 percent from a year earlier to 2.2133 trillion won.

Hana Bank posted annual net profit of 3.7454 trillion won last year, up 11.7 percent from a year earlier. It remained in third place behind KB Kookmin Bank and Shinhan Bank.

In non-bank units, Hana Securities posted net profit of 212.0 billion won, Hana Card 217.7 billion won and Hana Life 15.2 billion won. Overall contribution stood at 12.1 percent. It was the lowest non-bank share among the four groups.

Woori Financial Group posted net profit of 3.1413 trillion won last year, up 1.81 percent from a year earlier, posting results above 3 trillion won for a second straight year. Net interest income rose 1.6 percent to 9.0308 trillion won, while non-interest income rose 23.7 percent to 1.9266 trillion won. Within non-interest income, fee income increased 3.6 percent to 2.1605 trillion won.

Woori Bank's net profit, however, fell 14.2 percent from a year earlier to 2.6066 trillion won, weighing on group growth.

In non-bank units, Woori Card posted net profit of 149.9 billion won, Woori Financial Capital 148.7 billion won and Woori Investment Securities 27.4 billion won. Tongyang Life Insurance, newly consolidated, posted net profit of 42.0 billion won in its first year and supported results.

◆Dividends rise with earnings; shareholder returns race begins in earnest

Financial holding groups that posted record results moved quickly to record-level shareholder returns. Competition on earnings is carrying over into competition on dividends.

KB Financial's board resolved a fourth-quarter dividend of 1,605 won per share, about double the level a year earlier. Its annual payout ratio hit a record high of 27 percent.

With a common equity tier 1 ratio of 13.79 percent, it plans to expand shareholder returns this year by combining cash dividends and share buybacks totalling 2.82 trillion won.

Shinhan Financial also confirmed a year-end dividend of 880 won per share, bringing annual dividends to 2,590 won. Shareholder returns combining total cash dividends and treasury share purchases amount to 2.5 trillion won. Shinhan Financial plans to continue additional share buybacks to speed efforts to raise per-share value.

Hana Financial increased annual dividends to 4,105 won per share, up 14 percent from a year earlier, and confirmed total cash dividends of 1.1178 trillion won. It will also carry out share buybacks and cancellation worth 400.0 billion won in the first half.

Woori Financial also decided a record dividend of 1,360 won per share, taking total shareholder returns to 1.1489 trillion won.

A financial industry official said, "With earnings resilience confirmed despite changes in the interest rate environment, financial holding groups are moving in earnest to secure investor trust by increasing dividends." The official added, "Earnings and capital ratios are likely to become key competitive indicators for shareholder returns going forward."