South Korea’s KB Financial Group outperformed its local rivals, posting a record net profit for the first three months of the year as the banking industry’s overall performance was bolstered by a surge in interest and fee revenue, regulatory filings showed on April 22.

KB’s net income gained 14.4 per cent year-on-year to 1.45 trillion won ($1.17 billion) in the January-March period. Operating income gained 8.9 per cent year-on-year to 1.9 trillion won in the cited period.

Interest income increased 18.6 per cent year-on-year to 2.64 trillion won, backed by solid loans extended to households and businesses. KB plans to pay investors a dividend of 500 won per share and to regularise quarterly dividends, the firm said in a statement.

KB’s industry rival Shinhan Financial Group came in at number two, posting a net profit of 1.40 trillion won, a record performance for the first quarter and gaining 17.5 per cent year-on-year. It jumped 199 per cent quarter-on-quarter. Operating profit increased 13.29 per cent to 1.9 trillion won, backed by revenue from interest that grew 17.4 per cent year-on-year to 2.48 trillion won.

Shinhan plans to pay a quarterly dividend of 400 won per share and to hand out the same amount for the second and third quarter, according to the firm.

Household loans extended by its flagship Shinhan Bank declined 19.2 per cent on the back of tightened regulations and screenings, but loans extended to businesses grew 1.9 per cent in the cited period.

Hana Financial Group came at number three with a net income of 902.2 billion won in the same period, up eight per cent from a year earlier. Operating profit increased 2.2 per cent year-on-year to 1.1 trillion won.

Woori came at number four with a net profit of 884.2 billion won in the first three months of the year, up 32 per cent year-on-year. Net income jumped 106 per cent quarter-on-quarter. Operating profit gained 31.6 per cent year-on-year to 1.23 trillion won, while interest income increased 22.7 per cent to 1.99 trillion won in the same period.

Despite market concerns over financial authorities’ stricter loan regulations imposed on the banks to curb the nation’s growing household debt, banks were able to rake in money due to higher borrowing rates. The Bank of Korea, the central bank, raised its key interest rate by a quarter percentage point to 1.5 per cent, marking its fourth pandemic-era rate hike since August last year, driving up borrowing rates.

“While concerns of an economic slowdown continue to exist as a key risk, banking groups will likely post performances that exceed expectations for some time, backed by the central bank’s rate hikes,” said Choi Jung-wook, an analyst at Hana Financial Investment.