Seoul: Four major financial firms are projected to experience a decrease in interest income for the first time since 2020, attributed to stricter lending regulations aimed at managing housing price surges, recent data indicates.

According to Yonhap News Agency, KB Financial Group, Shinhan Financial Group, Hana Financial Group, and Woori Financial Group are anticipated to report a total interest income of 101.47 trillion won (US$68.8 billion) this year. This figure represents a 4 percent decrease from the previous year, based on data compiled by market researcher FnGuide. The decline marks a significant shift after four consecutive years of growth in interest income, following a drop in 2020 due to reduced borrowing costs during the COVID-19 pandemic.

The downturn in interest profits is expected to persist into 2025 as the government has implemented more stringent lending rules, including a cap on mortgage loans for home purchases in the capital region. An official from one of the financial firms, who preferred to remain anonymous, stated that the stricter household loan regulations have stunted interest revenue growth, and the outlook for future interest income appears bleak as these regulations are anticipated to continue.

Simultaneously, the combined net profit of these financial firms is predicted to reach a record 18.5 trillion won this year, marking an increase of over 10 percent from 16.5 trillion won in 2024. The significant rise in non-interest income, such as securities brokerage and investment banking fees, as well as gains from marketable securities, has been highlighted as a key factor in this robust performance. The Bank of Korea's decision not to lower key lending rates as much as initially expected also contributed to these results.

In more detail, KB Financial is forecasted to achieve a net profit of 5.75 trillion won this year, marking a 14.4 percent annual increase. Shinhan Financial's net profit is expected to rise by 15 percent to 5.25 trillion won. Hana Financial is likely to see a 9 percent gain, amounting to 4.1 trillion won in net profit, while Woori Financial is projected to record a net profit of 3.4 trillion won, up 8 percent.