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Korea Herald
4 days ago
- Business
- Korea Herald
Bank stocks rally as stronger won boosts capital ratios
Shares of South Korea's largest financial service providers — Hana, Woori, KB, and Shinhan — surged Tuesday, driven by expectations of stronger shareholder returns supported by improved capital adequacy. Hana Financial Group shares rose as high as 70,700 won ($57.57) during intraday trading, marking the highest price since its transition to a holding company in December 2005. The stock later trimmed some gains and closed at 70,100 won. Woori Financial Group also saw its shares hit a record high of 18,310 won during trading, the highest since becoming a holding company in January 2019, before closing daytime trading at 18,290 won. Other major financial service providers posted strong gains in stock prices as well. On Monday, KB Financial Group shares climbed to 102,000 won, approaching its all-time high of 103,900 won recorded on Oct. 25. With this rally, the firm's market capitalization reached 40.13 trillion won, making it the fifth-largest company on the local stock market, outrunning market giants such as Hyundai Motors and Hanwha Aerospace. It was the first time in nearly 15 years for KB to take the No. 5 spot since March 2010. However, as of Tuesday afternoon, KB shares edged down slightly and wrapped up trading at 101,900 won, dropping the company to sixth place in market cap, overtaken by Hanwha Aerospace, which stood at 41.95 trillion won. Shinhan Financial Group shares also posted a strong gain, closing at 56,500 won — a steep climb from 42,500 won on April 9. The stock's previous high stands at 64,600 won logged on Aug. 30. The recent rally in bank stocks is largely attributed to the strengthening of the Korean won. The currency appreciated into the 1,360 won per dollar range this week, recovering more than 100 won from its April low of nearly 1,490 won. On Tuesday, the value of the won was quoted at 1,369.5 per dollar when the daytime trading closed. A stronger won boosts the Common Equity Tier 1 (CET1) ratio, a key indicator of banks' capital adequacy, thereby allowing financial firms greater flexibility in enhancing shareholder returns. The improved capital position comes alongside solid earnings. The four major financial groups recorded a combined net profit of 4.92 trillion won in the first quarter of 2024, the highest Q1 performance on record, surpassing the 4.91 trillion won posted in Q1 2023. According to market tracker FnGuide, the firms are projected to post a combined net profit of 17.64 trillion won this year, up 6.8 percent year-on-year. "Considering the banks' profitability, even with increased treasury share buybacks, the CET1 ratio is still expected to improve," said Choi Jeong-wook, an analyst at Hana Securities. "Share prices of global banks tend to track the scale of their treasury share repurchases."
Korea Herald
15-05-2025
- Business
- Korea Herald
SC Korea's Q1 earnings soars 174% on one-off base effect
Standard Chartered Bank Korea reported a 174 percent jump in first-quarter net profit, largely driven by a favorable base effect from a nonrecurring loss booked a year earlier. The bank said Thursday that net profit for the January-March period reached 111.9 billion won ($80 million), up 174.3 percent from a year earlier. The sharp increase was attributed to the absence of a 130 billion won provision booked in the first quarter of 2024 for equity-linked securities tied to Hong Kong stocks, which had significantly weighed on last year's earnings. SC Korea was the only foreign lender to have sold the ELS products. Income from core business operations weakened, with operating profit falling 23 percent on-year to 136.6 billion won. Net interest income declined 4.5 percent to 307.3 billion won, as loan growth was offset by narrowing net interest margins. Non-interest income also dropped 11.1 percent to 880 billion won, weighed down by lower wealth management fees and reduced gains from foreign exchange and derivatives trading. Total assets rose by 7.5 trillion won from the end of December to 93.3 trillion won as of end-March, supported by growth in mortgage loans and derivatives-related assets. Return on assets improved to 0.51 percent, while return on equity rose to 8.23 percent. The bank maintained strong capital buffers, with its BIS total capital adequacy ratio at 19.08 percent and its Common Equity Tier 1 ratio at 15.9 percent, both well above regulatory thresholds.
Cision Canada
14-05-2025
- Business
- Cision Canada
Euroclear reports strong business income growth in Q1 2025
BRUSSELS, May 14, 2025 /CNW/ -- Results for the first quarter ending 31 March 2025 Financial highlights Strong underlying [1] business growth offsetting lower interest income Underlying business income for Q1 2025 reached a record €466 million, representing a 10% increase compared to Q1 2024. This growth was supported by robust business drivers, including fixed income issuance, increased equity quotations, and increased settlement activity due to market volatility related to geopolitical uncertainty. Underlying interest and banking income decreased by 10% compared to Q1 2024, to €255 million as expected given the declining interest rate environment. The impact was partially mitigated by increased cash balances. Underlying costs rose by 5%, broadly in line with expectations. This reflects investments in strategic development initiatives and inflation. Cost containment measures initiated last year continue to progress. As result of the positive operating leverage, business income operating margin improved from 23.4% in Q1 2024 to 27.1% in Q1 2025. Resulting adjusted net profit of €283 million decreased slightly by 1%. Adjusted Earnings Per Share remain stable year-on-year at €90. Euroclear Group retains a very strong capital position, comfortably above regulatory requirements with a Common Equity Tier 1 capital ratio of around 61% [2]. Following the acquisition of a 49% stake in Inversis (see below), Inversis' results are consolidated as from March 1 st, contributing to the group profit for €1.2 million through the share of results. The impacts of the Russian sanctions are detailed in the last section of this press release. Valerie Urbain, Chief Executive Officer of Euroclear, commented: "We have made a strong start to 2025, reporting a 10% increase in business income driven by robust growth in safekeeping fees and settlement income, offsetting the anticipated decrease in interest income as rates have declined. Despite market volatility and uncertainty, our continued growth shows the strength of our diversified, resilient business model. We continue to closely monitor the impact of tariffs imposed by the US administration announced in early April, but the immediate direct impact on our business so far remains limited. Resilience and reliability remain the top priorities for our business and the volatile backdrop has underscored the strength of Euroclear's systems, which continue to perform highly efficiently and securely during periods of elevated trading volumes. As Europe's largest player in post-trade, continuing to drive market openness, innovation and efficiency is central to our approach and we have made strong progress against our strategic priorities during the start of 2025. Our partnership with Microsoft will further enhance client experience, support our strategic ambitions and drive new opportunities for business growth. We are increasingly leveraging technological evolutions such as AI throughout the business to transform markets and to build an open digital and data-enabled platform that promotes collaboration, drives efficiency and delivers value for all market participants." Business performance The key operating metrics (end of period unless stated otherwise) demonstrate an excellent business performance during the period. Euroclear has reached record levels in settlement and safekeeping activities, with assets under custody growing for the tenth quarter in a row and closing the first quarter over the €41 trillion mark. The turnover increased by 23% compared to Q1 2024 thanks to high equity quotations, robust results in fixed income and increased settlement activity due to market volatility in the context of geopolitical uncertainty. The outstanding of Euroclear's Collateral Highway now surpasses to €2 trillion, while the funds depot is close to its peak of €3.6 trillion. Q1 2025 business milestones Strategic stake in Inversis Early March 2025, Euroclear successfully completed the acquisition of 49% of Inversis. This first transaction paves the way for the full acquisition of the Spanish company. This aligns with Euroclear's strategic vision to accelerate the growth of its one-stop-shop funds offering – Euroclear FundsPlace – and expand its presence in Southern Europe. Inversis' technology-led, diversified and resilient business model underpinned by continued growth perfectly complements Euroclear's existing funds business. New Singapore branch Further delivering on its Asia strategy, Euroclear Bank received approval for a branch licence in Singapore. Effective 1 February 2025, the new Singapore branch operates under a wholesale banking licence, enabling it to provide a broader range of activities. This change underscores Euroclear's long-standing commitment to the Asia Pacific market and its strategic focus on enhancing operational resilience while increasing proximity to clients in the region. New, innovative service for US Treasury repo market Euroclear launched a US Treasury Delivery-Versus-Payment (DVP) repo service. The service offers cash lenders similar operational efficiency for DVP repo transactions as triparty repo transactions. Repo collateral is held in a segregated account with the cash lender's custodian of choice. Electronic trading workflows on venues are integrated into the new service, making activities such as collateral allocation seamless for cash lenders and their counterparties. Strategic partnership with Microsoft harnessing cloud, data and AI Euroclear entered into a 7-year strategic partnership with Microsoft to transform Euroclear clients' experience and drive new opportunities for growth. The partnership further strengthens Euroclear's business ecosystem and technology infrastructure by leveraging Microsoft's leading technology, expertise and cloud services. This will enhance Euroclear's ability to create value for all market participants and unlock new opportunities at the core of the capital markets ecosystem. Microsoft will support Euroclear's strategic ambition in key growth areas like funds and client experience as well as its long-term vision to evolve into a Digital and Data-Enabled Financial Market Infrastructure. Russian sanctions impacts Financial impacts of the Russian assets Interest earnings from Russian sanctioned assets were €1,470 million, a 7.5% decrease from Q1 2024 due to gradual rate cuts. Future interest earnings will continue to evolve in line with future policy rates. As required by the EU windfall contribution regulation implemented in May 2024, Euroclear provisioned €944 million as windfall contribution for Q1 2025. The Russian sanctions and countermeasures resulted in direct costs of €22 million and a loss of business income of €9 million. Interest earnings related to Russian assets, which are subject to Belgian corporate tax, generated €360 million in tax revenue for the Belgian State. Update on Russian sanctions and countermeasures Russia's invasion of Ukraine in February 2022 resulted in market-wide application of international sanctions. Euroclear considers the application of international sanctions as a key obligation. Therefore, well established processes are in place which have allowed the group to implement the sanctions while maintaining our normal course of business. As a result of the sanctions, blocked coupon payments and redemptions owed to sanctioned entities continue to accumulate on Euroclear Bank's balance sheet. At the end of March 2025, Euroclear Bank's balance sheet totalled €230 billion, of which €195 billion relate to sanctioned Russian assets. In line with Euroclear's risk appetite and policies and as expected by the EU Capital Requirements Regulation, Euroclear's cash balances are re-invested to minimise risk and capital requirements. In the first quarter of 2025, interest arising on cash balances from Russian-sanctioned assets was approximately €1.5 billion. In May 2024, the European Commission has adopted a new regulation about a windfall contribution applicable to CSDs holding Russian Central Bank assets with a total value of more than €1 million. The profits generated by the reinvestment of these sanctioned amounts dating from 15 February 2024 onwards are required to be contributed to the European Fund for Ukraine. After retention of a 10% share of the windfall contribution to comply with capital and risk management requirements, Euroclear paid approx. €3.5 billion to the European Fund for Ukraine for the 2024 fiscal year. Euroclear continues to act prudently and to strengthen its capital by retaining the remainder of the Russian sanction related profits as a buffer against current and future risks. Euroclear is focused on minimising potential legal, financial, and operational risks that may arise for itself and its clients, while complying with its obligations. As a direct consequence of the sanctions and countermeasures, Euroclear faces multiple proceedings in Russian courts. Since Russia considers international sanctions against public order, Russian claimants initiated legal proceedings aiming mainly to access assets blocked in Euroclear Bank's books, by claiming an equivalent amount in Russian Ruble and enforcing their claim in Russia. Despite all legal actions taken by Euroclear and the considerable resources mobilised, the probability of unfavourable rulings in Russian courts is high since Russia does not recognise the international sanctions. [1] Excluding Russian sanctions impacts [2] Based on estimated RWA of around €14.4 billion (of which around €6,3 billion of RWA are related to Russian assets) and CET1 capital of around €8.8 billion About Euroclear Euroclear group is the financial industry's trusted provider of post trade services. Guided by its purpose, Euroclear innovates to bring safety, efficiency and connections to financial markets for sustainable economic growth. Euroclear provides settlement and custody of domestic and cross-border securities for bonds, equities and derivatives and investment funds. As a proven, resilient capital market infrastructure, Euroclear is committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise. The Euroclear group comprises Euroclear Bank, the International CSD, as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden, Euroclear UK & International.
Korea Herald
14-05-2025
- Business
- Korea Herald
Woori mulls selling Seoul landmark to secure cash
Woori Financial Group is considering selling several core real estate assets, including the landmark Woori Financial Digital Tower in central Seoul, as it looks to raise capital for subsidiary acquisitions and improve its financial footing. The banking group is reviewing a potential sale of the 22-story building, located on a 2,247-square-meter plot across from its headquarters in Hoehyeon-dong, Jung-gu — one of Seoul's busiest commercial zones north of the Han River — according to industry sources on Wednesday. A Woori official confirmed the move, saying the sale is among several options under review to improve asset efficiency and secure capital for expansion. Woori acquired the building in July 2019 for about 210 billion won ($148.2 million). While no official valuation has been disclosed, its value is estimated to exceed 300 billion won, based on office pricing in the Central Business District, which is assessed by industry watchers at over 30 million won per 3.3 square meters. The tower currently houses the group's digital business units and affiliates, with a sale-and-leaseback arrangement among the options under consideration, the official added. The group also seeks to sell its corporate training center in Anseong, Gyeonggi Province. The facility was valued at approximately 34 billion won earlier this year. In addition, more than a dozen vacant bank branches in Seoul and other regions have been put up for public auction, with a combined minimum value of about 224 billion won. Woori's large-scale real estate divestment comes as the group pushes deeper into the insurance sector. Last August, it signed a deal to acquire a 75 percent stake in Tongyang Life Insurance and full ownership of ABL Life Insurance for a combined 1.5 trillion won. On May 2, the Financial Services Commission granted final approval to incorporate the two insurers as subsidiaries, conditional on the group significantly strengthening its financial soundness and internal controls. Woori aims to raise its Common Equity Tier 1 ratio — a key measure of capital adequacy — as it continues to trail peers. Its CET1 ratio stood at 12.42 percent at end-March, up from 12.08 percent at the end of 2024, but still below the 13-percent level maintained by Korea's three other major financial groups. The group is targeting a CET1 ratio above 13 percent by 2027, the deadline set by regulators as part of the conditional approval.
Time of India
06-05-2025
- Business
- Time of India
US banks modest use of risk transfers is credit positive, Moody's says
5 5 Next Stay Playback speed 1x Normal Back 0.25x 0.5x 1x Normal 1.5x 2x 5 5 / Skip Ads by Live Events A very small proportion of U.S. banks have issued a complex product that enabled them to shed risk from loan portfolios and the relatively modest use of the products was a credit positive, Moody's Ratings said in a report after surveying 69 rated U.S. deals known as credit risk transfers , banks effectively buy insurance from hedge funds and other investors against the risk of losses from grew in popularity in 2022 as regulators proposed increases to capital requirements for large banks after the regional banking crisis and under the Basel III regulations that pushed banks to look for ways to improve their regulatory capitalization only 15 out of 69 U.S. banks surveyed by Moody's issued CRTs and their use was relatively modest, reflected in a median capital benefit of a 25 basis point increase in the Common Equity Tier 1 (CET1) ratio - which measures the quality of a bank's assets, the report said."More material increase of more than 1% would likely indicate an overreliance on CRTs and therefore be credit negative," it total outstanding CRT balances for these banks exceeded $15 billion, referencing more than $150 billion in assets, it said noting issuance volume correlated with the size of the bank, which was also a credit the 26 surveyed banks with assets of $100 billion or more, 11 (42%) have issued CRTs and of the 43 rated banks with assets less than $100 billion, only four (9%) have issued CRTs, it completed only a few transactions, reflected in a median of three transactions and backed by high quality performing assets. The most active CRT issuers tend to be the global investment and universal banks, it investors were also quite concentrated, with the largest investor holding around 40% of a bank's total CRT exposure and the top three investors holding around 80%. Most banks' CRTs had no more than 10 investors, the survey new CRT issuance in 2025 is likely to come from banks that have already engaged in such transactions and most of the survey respondents that had not already participated said they were unlikely to do so, said Moody's.
