Major financial groups enjoy strong Q3 earnings, but face mounting regulatory pressure

Korea’s four largest financial groups — KB, Shinhan, Hana and Woori — have shown strong earnings for the third quarter of this year, posting a combined 5.76 trillion won ($4.31 billion) in net profit. But a recent wave of cyberattacks and data breaches, as well as tougher regulatory scrutiny of corporate governance, are adding to the challenges they face, industry officials said Thursday.

According to market data, KB Financial Group led the pack with a third-quarter net profit of 1.91 trillion won, up 13.1 percent from a year earlier. Its cumulative profit for the first nine months reached a record 5.79 trillion won.

Shinhan followed with 1.58 trillion won, an 11.3 percent increase from the same period last year. Its nine-month net profit also hit a record, at 5.03 trillion won.

Hana logged a net profit of 1.22 trillion won, its highest quarterly figure since the 2015 merger of Hana Bank and Korea Exchange Bank.

Woori was the only one of the four to post a decline, with net profit falling 15.7 percent to 1.04 trillion won. Even so, it recorded a quarterly profit of over 1 trillion won for the second consecutive quarter for the first time since the group was launched in 2019.

Such strong earnings come amid regulators’ growing demand for accountability from financial groups over cybersecurity and governance.

A recent string of cyberattacks and the subsequent data leaks across the financial sector has intensified concerns over firms’ security systems and internal controls, particularly as hackers gain access to increasingly sophisticated, artificial intelligence (AI)-powered tools.

At a regular meeting with the heads of eight financial holding companies on Wednesday, Financial Supervisory Service (FSS) Gov. Lee Chan-jin urged company boards to take a more active role in cybersecurity.

“Firms must stop treating IT security as a secondary concern, merely going through the motions of regulatory compliance or skimping on the staff and resources needed to protect their systems because they view security spending as a cost,” he said.

Lee also pressed the groups to improve their governance practices as succession procedures for subsidiary CEOs get underway, calling for greater transparency and fairness in the appointments.

The Financial Services Commission (FSC) has also stepped up its response. At an emergency meeting on Oct. 14, Secretary General Shin Jin-chang voiced concern that financial firms had continued to fall short of basic security standards despite continuous warnings to strengthen their defenses.

“It is deeply troubling that firms are still failing to meet basic security requirements despite repeated calls for comprehensive inspections and stronger controls,” he said.

FSC Chairman Lee Eog-weon is scheduled to meet with chiefs of major financial industry associations and CEOs of the country’s five commercial banks on Nov. 5 to review how the sector can strengthen its defenses against cyberattacks using AI.