(26 July 2005 – South Korea) South Korean banks have almost doubled their net profits in the first half of this year compared with the corresponding period a year earlier, according to the country’s financial watchdog.The banks posted a 6.59 trillion won (US$6.43 billion) profit for first half of this calendar year, up more than 81 percent on the first half of 2004.
But the Financial Supervisory Service (FSS) said the profit increase was driven by reduced bad debts rather than new business growth.
“For the time being, the lenders will cut their bad debt cost and other expenses and improve their bottom line,” the FSS said.
“However, the lenders will have to improve their overall profits to sustain their businesses,” the watchdog warned.
The amount the banks put aside for bad debts was down 3.7 trillion won this year, to 5.9 trillion won.