First-half bank interest income hits record 32.2 trillion won

South Korean banks have reported a record-breaking 32.2 trillion won in interest income for the first half of 2026, marking the highest semi-annual earnings in history. This represents an 8.3% increase compared to the same period last year, according to data released by the Financial Supervisory Service.

The surge in interest income is primarily driven by a 6.4% expansion of interest-earning assets, including loan receivables, coupled with an increase in net interest margins. The net interest margin, a key indicator of banks' interest profitability, rose from 1.52% in the first half of 2025 to 1.56% in the first half of 2026, reflecting the impact of rising market interest rates.

This trend suggests that the annual interest income for domestic banks could exceed 60 trillion won for the third consecutive year. In 2021, annual interest income surpassed 50 trillion won for the first time, reaching 55.9 trillion won, and then exceeded 60 trillion won in 2022, hitting 60.4 trillion won.

Conversely, non-interest income, which includes fees and commissions, saw a substantial decline of 43.4% year-on-year, falling to 2.9 trillion won. While foreign exchange and derivatives-related profits increased by 2.3 trillion won due to the rising won-dollar exchange rate, this was offset by a 5.7 trillion won decrease in securities-related profits. This decline in securities profits is attributed to the falling prices of bonds held by banks amid rising market interest rates.

Operating expenses, including labor costs and other administrative expenses, increased by 5.4% to 14.4 trillion won. The overall net profit for the period decreased by 6.4% to 13.8 trillion won, largely due to the significant drop in non-interest income. Commercial banks recorded a net profit of 8.1 trillion won, while regional banks earned 600 billion won, and internet banks 400 billion won. Special policy banks contributed 4.6 trillion won to the total net profit.