Will Industrial Bank of Korea’s run continue?
Industrial Bank of Korea, Korea's biggest lender to small and mid-sized companies, posted a smaller-than-expected gain in 2007 profit as it set aside more provisions against risky loans to meet stricter regulations.
Net income rose to 1.17 trillion won ($1.2 billion) from 1.05 trillion won a year ago, the Seoul-based bank said in a regulatory filing. That missed the average estimate of 1.27 trillion won by 20 analysts surveyed by Bloomberg News.
New standards are likely to hurt Industrial Bank more than rivals because the government considers loans to small companies to be riskier than lending to large corporations. The bank is required by law to provide more than 80 percent of its loans to small and mid-sized companies, defined as those with fewer than 300 employees and less than 100 billion won in annual sales.
“Even if you take the extra loan provisions Industrial Bank had to set aside in the fourth quarter as a one-time event, it is unlikely the bank will see significant growth in lending,” said Koo Kyung Hwe, a banking analyst at Hyundai Securities, who has a “market perform” rating on the stock.
Industrial Bank fell 1.2 percent to 16,550 won in Seoul before the earnings were released.
The bank's outstanding loans rose 15 percent to 84.3 trillion won at the end of 2007 from a year earlier, the bank said in an e-mailed statement.
South Korea will fully introduce stricter capital adequacy measures proposed by the Bank for International Settlements in 2009, after adopting basic rules related to loan risks this year.
Industrial Bank is seeking to offer services such as insurance and broking before new rules take effect in 2009 that will remove barriers between banks, securities firms and asset managers. Chief Executive Officer Yun Yong Ro said in his inauguration speech that the bank will set up a securities unit as well as an insurance company.
Will these measures succeed?
Net income rose to 1.17 trillion won ($1.2 billion) from 1.05 trillion won a year ago, the Seoul-based bank said in a regulatory filing. That missed the average estimate of 1.27 trillion won by 20 analysts surveyed by Bloomberg News.
New standards are likely to hurt Industrial Bank more than rivals because the government considers loans to small companies to be riskier than lending to large corporations. The bank is required by law to provide more than 80 percent of its loans to small and mid-sized companies, defined as those with fewer than 300 employees and less than 100 billion won in annual sales.
“Even if you take the extra loan provisions Industrial Bank had to set aside in the fourth quarter as a one-time event, it is unlikely the bank will see significant growth in lending,” said Koo Kyung Hwe, a banking analyst at Hyundai Securities, who has a “market perform” rating on the stock.
Industrial Bank fell 1.2 percent to 16,550 won in Seoul before the earnings were released.
The bank's outstanding loans rose 15 percent to 84.3 trillion won at the end of 2007 from a year earlier, the bank said in an e-mailed statement.
South Korea will fully introduce stricter capital adequacy measures proposed by the Bank for International Settlements in 2009, after adopting basic rules related to loan risks this year.
Industrial Bank is seeking to offer services such as insurance and broking before new rules take effect in 2009 that will remove barriers between banks, securities firms and asset managers. Chief Executive Officer Yun Yong Ro said in his inauguration speech that the bank will set up a securities unit as well as an insurance company.
Will these measures succeed?
posted by Charltonmedia.com @ 9:49 AM
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