South Korea's savings bank industry posted a cumulative net profit of 765.8 billion won in the first half of this year, extending profitability to a second straight quarter. Asset quality indicators improved as both the delinquency rate and the ratio of substandard loans fell from the previous quarter.

The Korea Savings Bank Federation said on Aug. 28 that savings banks posted a cumulative net profit of 765.8 billion won for the first half, citing its "Savings Bank Settlement Results for the Second Quarter of 2026". Net profit for the second quarter came to 432.0 billion won, following a profit of 333.8 billion won in the first quarter.

The federation said results improved as the burden of provisions for loan losses eased due to reserves built up in advance, while income from securities operations increased.

Interest income in the first half totalled 2.73 trillion won, while non-interest gains came to 436.4 billion won. Provisions for loan losses totalled 1.39 trillion won.

Assets also rose. Total assets at savings banks stood at 120.6 trillion won at end-June, up 1.3 trillion won from 119.3 trillion won at end-March. Loans rose by 800.0 billion won to 95.8 trillion won, while corporate loans increased by 400.0 billion won to 48.5 trillion won and household loans rose by 200.0 billion won to 39.6 trillion won.

Private mid-interest-rate loans increased to 18.2 trillion won in June from 17.6 trillion won at end-2025 and 17.6 trillion won in March.

Deposits rose by 800.0 billion won from the previous quarter to 100.4 trillion won. Deposits increased due to factors including deposit-rate hikes to respond to fund flows into capital markets and upcoming maturities of time deposits in the second half.

Asset quality indicators improved. The savings banks' delinquency rate stood at 6.3 percent at end-June, down 0.4 percentage point from 6.7 percent at end-March. The delinquency rate for corporate loans fell 0.5 percentage point to 8.4 percent from 8.9 percent, and the rate for household loans slipped 0.2 percentage point to 4.6 percent from 4.8 percent. Active sales and write-offs of bad loans, as well as loan growth, affected the change. Sales and write-offs in the second quarter totalled 1.1 trillion won, up from 600.0 billion won in the first quarter.

The ratio of substandard loans fell 0.4 percentage point to 8.2 percent from 8.6 percent. The BIS capital ratio came to 15.7 percent, down 0.3 percentage point from the previous quarter, but it remained about twice the statutory minimum. The liquidity ratio was 138.9 percent and the loan loss provision ratio was 107.9 percent, both above the statutory standards.

The federation forecast that the industry will remain profitable in the second half. It cited risks including increased domestic and external volatility in capital markets and elsewhere, a delay in the recovery of the property market and weaker debt repayment capacity among vulnerable borrowers.