South Korea’s Woori Financial Group Inc. was first among financial majors to herald hot earning streak by capitalizing on the widened gap in deposit and borrowing rates ahead of rise in interest rates and still-lush liquidity.

The holding group in a regulatory filing on Wednesday said its consolidated net income jumped five-fold on year to 752.6 billion won ($653.18 million). For the first half, the net reached 1.42 trillion won, exceeding last year’s total annual net of 1.3 trillion won.

Woori Financial Group’s shares finished Thursday up 3.56 percent at 11,650 won.

Woori Bank was responsible for the lion’s share of 92 percent of the income.

The bank benefited from hike in lending rates under the state order to regulate consumer loans, while deposit rate remained in the zero territory.

The bank’s net interest margin (NIM), a key measure of profitability, jumped to 1.37 percent in the second quarter.

Rising balance of the bank’s demand deposit accounts helped prop up its profitability. The outstanding balance of Woori Bank’s demand deposit reached 113.5 trillion won as of end-June, expanding 10.6 percent from six months ago.

Its loan-loss provisions declined to 12.4 billion won in the second quarter, compared with 277.2 billion won reserves a year ago during the early outbreak of Covid-19. This helped net profit grow sharply, the bank said. “Since we have piled up enough allowance for bad debts last year, the cost burden came significantly down,” a Woori Bank official said.

The ratio of profit to administrative costs of the group sharply decreased to 45.9 percent in the April-June period.

Non-interest income of Woori Financial Group jumped 54.1 percent on year to 721.3 billion won in the first half driven by its strong asset management and securities business.

The group maintained the industry’s highest level of financial soundness despite continued concerns from coronavirus impacts.

Its non-performing loan (NPL) ratio and delinquency ratio hit an all-time low in the second quarter, standing at 0.37 percent and 0.26 percent, respectively.

By Moon Il-ho and Lee Soo-min

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