Foreign bank branches in South Korea saw their combined net profit jump over 40 percent in 2022 due to a rise in earnings from derivative products amid heightened market volatility, data showed Tuesday.

The combined net income of 35 foreign lenders' local branches stood at 1.5 trillion won (US$1.15 billion) last year, up 40.4 percent, or 429.7 billion won, from a year earlier, according to the preliminary data from the Financial Supervisory Service (FSS).

The rise came mostly from increased derivative products-linked profits, which grew 4.7 trillion won on-year to 9.9 trillion won amid expanded transactions of derivatives used to hedge against volatility in foreign exchange and interest rates.

They, however, saw interest income fall 9.3 percent on-year to 1.6 trillion won with their losses from securities holdings sharply rising from 1 trillion won to 2.8 trillion won over the cited period.

The FSS said it will strengthen risk management of foreign exchange and derivatives transactions in anticipation of increased internal and external volatility, while keeping tabs on the vulnerable sectors of each bank.

Source: Yonhap News Agency