Regional financial holding companies in South Korea are expected to report mixed results for the first quarter of 2025, data showed on Wednesday.

According to financial data tracker FnGuide Inc. on Wednesday, the combined net profit for the country’s three regional financial groups (BNK, JB, and iM) is projected to be 532.6 billion won ($373.11 million) in the first quarter of the year, a 2 percent decline from the 543.6 billion won recorded during the same period a year ago.

The primary drag on the overall performance is BNK Financial Group, which is expected to see its first-quarter net profit fall 17.9 percent year-on-year to 208.9 billion won. This downturn is largely attributable to deteriorating conditions among key corporate clients and an overall economic slowdown.

A fire also broke out in February 2025 at the Banyan Tree Resort construction site in Busan, which is managed by BMK’s local client Samjung Enterprise that has since filed for corporate rehabilitation and another key client, Busan-based secondary battery firm Kumyang Co., is facing potential delisting. Both companies are major borrowers from BNK’s Busan Bank.

Approximately 45 billion won in loan-loss provisions related to these issues is expected to be reflected in BNK‘s first-quarter earnings, significantly impacting its net income as provisions are treated as expenses.

“The default of large loans to regional companies has significantly worsened BNK’s asset quality,” Mirae Asset Securities Co. analyst Jung Tae-joon said. “Its loan-loss ratios have risen sharply compared to a year ago and non-interest income is also expected to underperform, making a downward revision in earnings inevitable.”

For their parts, iM Financial and JB Financial are projected to continue their stable growth trajectories.

iM Financial is expected to post a net profit of 145.3 billion won in the first quarter of 2025, up 28.6 percent year-on-year. Industry analysts attribute this improvement to the easing of burdens related to project financing (PF) provisions.

JB Financial is projected to report a 1.4 percent increase in net profit to 178.4 billion won, supported by growth in its non-banking division including JB Woori Capital Co. JB Woori Capital posted a record-high profit of 223.9 billion won in 2024, outperforming Jeonbuk Bank’s 221.2 billion won.

However, analysts caution that the overall outlook for regional financial groups remains uncertain given regional economies remain sluggish.

[ⓒ 매일경제 & mk.co.kr, 무단 전재, 재배포 및 AI학습 이용 금지]