The first-half results of three region-based financial holding companies - BNK Financial Group, JB Financial Group and iM Financial Holding - slipped. JB Financial posted its biggest ever half-year profit, but the combined results fell from a year earlier as net profit at BNK Financial and iM Financial declined.

According to the financial sector on Monday, the three groups' combined first-half net profit attributable to controlling shareholders totalled 1.0931 trillion won. That was down 62.4 billion won, or 5.4 percent, from 1.1555 trillion won a year earlier.

By company, BNK Financial had the largest profit at 411.8 billion won, followed by JB Financial at 385.7 billion won and iM Financial at 295.6 billion won. From a year earlier, only JB Financial rose, up 4.1 percent, while BNK Financial and iM Financial fell 13.5 percent and 4.4 percent, respectively.

◆ Four major groups at 11 trillion won ... 10 times regional groups

Over the same period, the combined net profit of the four major financial groups - KB, Shinhan, Hana and Woori Financial Group - reached 11.3392 trillion won. All four increased net profit from a year earlier.

The gap between the combined net profit of the four major groups and that of the three regional groups was 10.2461 trillion won. That means the four major groups earned 10.4 times the net profit of the three regional groups.

In the first half of last year, the four major groups' combined results were about 8.9 times those of the regional groups. This year, the gap widened further as the majors' net profit rose across the board while the regional groups declined.

Among the three regional groups, only JB Financial increased net profit. Its first-half net profit rose 4.1 percent from a year earlier to 385.7 billion won, a record for a half-year period. Its second-quarter net profit also climbed 5.7 percent to 219.6 billion won, surpassing BNK Financial's second-quarter net profit of 200.4 billion won.

Results at its main banks were weak. Jeonbuk Bank's first-half net profit fell 19.0 percent to 94.5 billion won, and Gwangju Bank's slipped 1.2 percent to 146.7 billion won. JB Woori Capital instead posted net profit of 176.8 billion won, up 34.2 percent from a year earlier, offsetting the banks' decline.

BNK Financial had the largest net profit among the three, but also recorded the biggest decline due to one-off factors.

In the first half of last year, it reflected a 100.9 billion won gain from the sale of BNK Gangnam Core Office Fund. This year, a 44.0 billion won temporary accounting loss occurred during the purchase of external stakes in the BNK Yeouido Core Office Fund. BNK Financial said first-half net profit excluding one-off factors, calculated for comparison, was 455.8 billion won, up 8.2 percent from a year earlier.

iM Financial's first-half net profit fell 4.4 percent to 295.6 billion won. Total operating profit rose 4.4 percent on the back of corporate lending and an expansion of capital operating assets, as well as higher securities fee income. Non-recurring costs from changes to the education tax rate and higher provisions due to asset growth weighed on net profit.

◆ Non-bank units show mixed results

The performance gap between the four major groups and the regional groups was seen not only in bank asset size but also in the scale of non-bank portfolios.

At the regional groups, non-bank affiliates such as JB Woori Capital, BNK Investment & Securities and iM Securities helped support results. But growth at some affiliates did not reach a scale large enough to steadily absorb declines in bank net profit or one-off losses.

JB Financial is lowering reliance on its banks, centred on its capital unit. But BNK Financial and iM Financial saw group-wide net profit fall despite growth in non-bank businesses.

Talk of a merger between BNK Financial and JB Financial, raised as a way to expand the scale and investment capacity of regional finance, effectively collapsed after both companies refused to review it.

BNK Financial held a board meeting on Monday and decided not to begin a review of the feasibility of merging with JB Financial, as requested by Align Partners. It also will not form a separate special committee. In the board vote, 5 of 8 attending directors opposed, 2 supported and 1 abstained.

JB Financial also concluded in a filing on Monday that it "judged it inappropriate to review whether to proceed with a merger under the current circumstances". Both companies stated their refusal about 10 days before Aug. 7, Align Partners' deadline for a response.

Earlier, Align Partners demanded a feasibility review, saying a combined group would launch a regional financial holding company with total assets of 234 trillion won, lowering funding and IT and administrative costs and enabling large-scale artificial intelligence transformation investment. It did not call for an immediate merger, but asked for a review through an independent special committee and external advisers.

After the proposal, local communities in Busan and the Honam region and local bank unions continued to voice opposition, citing weakened regional financial functions and the possibility of branch and workforce reductions. Financial authorities also kept their distance, saying the matter had not been discussed in advance, and the industry raised the view that licensing approval was unlikely.

◆ Structural challenges remain even as merger talks fail

The merger review has stopped, but that does not mean the profitability and growth challenges facing regional finance have disappeared.

In digital and artificial intelligence fields, the gap in investment capacity versus the four major groups could widen. Align Partners analysed that BNK Financial and JB Financial's combined software and development spending in 2025 was 211.9 billion won, about one-third of the four major groups' average of 604.2 billion won.

An analysis says the need is growing to prove an independent growth strategy through results before the performance gap with the four major groups continues to widen.

Questions also continued on BNK Financial's conference call on Monday about whether it would be difficult to achieve the growth it originally targeted this year.

A BNK Financial official said the group has pursued a policy in the first half of expanding net interest income through qualitative growth focused on high-quality assets. The official said that growth could translate into higher profits as it meets interest rate increases in the second half.

The official added that the direction of the 8 percent net interest income growth target announced in the previous earnings release remains valid.