Foreign banks operating business in South Korea saw their net profits plummet by 39 percent in 2016 from a year earlier, with several of them leaving the country due to mounting losses, government data showed Monday.

According to data from the Financial Supervisory Service, the combined net profits of 43 foreign banks here stood at 689.3 billion won ($603.5 million) last year, a 39.1 percent on-year decrease from 1.13 trillion won in 2015.

Foreign banks’ net profits grew 16.6 percent on-year in 2014 but the growth slowed to 3.6 percent in 2015, and then to a 39 percent fall in 2016.

The decline in net profits of foreign banks is attributed to two factors -- the withdrawal of some foreign banks who do not operate business in Korea and the large drop in net profits at Chinese banks, according to the FSS.

Barclays, Goldman Sachs and UBS left the Korean market last year, suffering net losses. In 2016, Barclays saw a 38 billion won net loss, Goldman Sachs recorded a 13.9 billion won net loss, and UBS saw a 19.9 billion won net loss.

Chinese banks here also saw their net profits largely drop last year due to the slowdown of the Chinese economy.

“Chinese banks used to raise big net profits by borrowing money in Korea at a cheap cost and re-investing the money in higher-yielding China, but the high interest rate snapped last year,” an FSS official said.

The Bank of China’s net profit plunged 68 percent to 25.5 billion won in 2016 from a year earlier and the Industrial and Commercial Bank of China’s net profit also decreased 48 percent on-year to 49.2 billion won. The net profit of China Construction Bank tanked 84 percent to 6.8 billion won.

The large drop in the net profits of foreign banks pulled down the average of net profits at all foreign financial institutions including brokerages and insurers, the FSS data showed. The net profits at all foreign financial firms fell 4.1 percent on-year to 2.32 trillion won in 2016.

Meanwhile, foreign savings banks fared well in South Korea last year. Their net profits skyrocketed 460 percent on-year in 2016, mainly due to their business expansion in household loans in the country.

The number of foreign financial firms increased by two to 168 last year, including 39 from the US, 21 from Japan, 17 from the UK and 15 from Germany.

For trade, remittance and foreign exchange, Asian banks are continuing to make inroads into the Korean market, especially from China, India and Indonesia, the FSS said.

By Kim Yoon-mi (yoonmi@heraldcorp.com)