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Financial firms set to post record profits

South Korean banks and brokerages are expected to rake in record-high profits this year on their aggressive sales strategies, despite ongoing global economic uncertainties, industry data showed Thursday.

The combined net profit of 17 local brokerages soared 107.9 percent on-year to 362.3 billion won ($306.5 million) in the April-June period, while their operating profit jumped 87 percent over the cited period, analysts said of data provided by the Financial Supervisory Service.

Local banks have also posted solid profits this year, with the net profit totaling 4.5 trillion won and 5.5 trillion won in the first quarter and second quarter, respectively.

The combined net profit of eight local financial services groups and banks, including heavyweights Woori Finance Holdings Co. and KB Financial Group Inc., were expected to reach around 3.2 trillion won for the July-September period, according to separate data compiled by FnGuide, a financial information provider.

Market watchers said if the trend continues, local lenders and securities firms are poised to post record profits this year.

However, some raised concerns that the rosy profits come on the back of aggressive sales strategies, which put more focus on big-pocket clients than smaller firms and retail customers.

As of the end of August, Kookmin Bank’s outstanding loans to small and medium enterprises dipped 132.2 billion won on-month, while those of Shinhan and Woori slumped 449 billion won and 454.1 billion won, respectively.

According to the Bank of Korea’s survey on commercial banks, the index that measures their lending attitude to SMEs stood at 13 for the fourth quarter, down from 19 three months earlier, raising suspicions that smaller firms will face more difficulty in securing funds. (Yonhap News)