The combined net profit of five financial holding firms in South Korea dropped sharply from a year earlier in the first quarter, data showed Friday, amid a rise in reserves set aside for the compensation of incomplete sales involving equity-linked securities (ELS) products. In the three months ended March 30, the combined net profit of the five financial holding firms came to 4.88 trillion won (US$3.54 billion), down 16.7 percent from the same period last year. Also, all five firms separately saw their Q1 net profit shrink from a year earlier, they said in regulatory filings. The five financial holding firms are KB Financial Group, Shinhan Financial Group, Hana Financial Group, Woori Financial Group and Nonghyup Financial Group. The on-year drop was largely attributed to losses related to ELS products tracking Hong Kong's H Index. The five financial groups set aside a combined 1.66 trillion won in reserves in the January-March period alone for the compensation of incomplete sales involving such products . By firm, KB Kookmin Bank, the flagship business of KB Financial, alone was forced to set aside 862 billion won in additional reserves in the first quarter, followed by NH Nonghyup Bank with some 341 billion won and Shinhan Bank with 274 billion won. Despite a drop in their combined net profit, the financial holding firms' combined operating profit grew from a year earlier amid a steady increase in loans. Their combined operating income reached 8.62 trillion won in the first three months of the year, up 5.5 percent from a year before. The operating income of Shinhan Financial jumped 17.8 percent on-year to 2.07 trillion won, followed by Hana Financial with an operating income of 1.56 trillion won, up 2.9 percent on-year. Woori Financial's operating income dipped 8.2 percent on-year to 1.15 trillion won, with that of Nonghyup Financial shrinking 1.1 percent to 1.48 trillion won. Source: Yonhap News Agency