Samsung's financial arms beat No.1 banking group KB in profit

Samsung Group's financial services business has overtaken South Korea's No. 1 banking group KB Financial Group in terms of net profit, posing a threat to bank-centered financial services firms.

Samsung’s four financial services units – Samsung Life Insurance Co., Samsung Fire & Marine Insurance Co., Samsung Securities Co. and Samsung Card Co. – flagged a combined net profit of 3.20 trillion won ($2.4 billion) in the first half of this year, according to financial industry sources on Friday.

The figure excluded the results of another Samsung’s financial arm Samsung Asset Management Co.

Samsung Group is not allowed to enter the banking industry under the law that bars manufacturing-focused groups from expanding into the banking sector.

Instead, the household name has been spreading its wings in the non-banking sector, into which domestic banking groups are striving to expand in search of new growth drivers.

First-half net profits of Samsung Group's financial business and other major banking groups (Unit: billion won)
Samsung Group	3,200.9
KB Financial Group	2,781.5
Shinhan Financial Group	2,747.0
Hana Financial Group	2,068.7
(Note: Samsung Group's results are on a stand-alone basis
(Source: Company data)

The first-half results of Samsung's four financial services companies surpassed KB Financial Group’s 2.78 trillion won in combined net profit of its 60 subsidiaries and those of other top banking groups such as Shinhan Financial Group, Woori Financial Group, Hana Financial Group and NongHyup Financial Group.

The combined net profit of the country's top five financial holding groups exceeded 11 trillion won in the first half of this year, their largest-ever sum for a six-month period. Their average profit fell short of that of Samsung’s four financial units in aggregate.

In the first quarter ended in March, Shinhan Financial Group claimed the top place in the domestic financial services market with a net profit of 1 trillion won. But in terms of first-half earnings, Samsung outstripped Shinhan.

The four financial companies under Samsung Group all enjoyed a rise in first-half net profit from the year prior.   

LIFE INSURANCE AND CREDIT CARD UNITS

In both the life and non-life insurance markets, Samsung has cemented the No. 1 position.

Samsung Life saw its first-half net profit soaring 40.5% to 1.37 trillion won from the same period last year.

The balance of Samsung Life's contractual service margin (CSM), a key measure of life insurers’ profits, increased to 12.7 trillion won as of the end of June, versus 12.2 trillion won at the end of 2023.

Health insurance that makes a greater contribution than other insurance products to the CSM accounts for 54.3% of its revenue in the first half of this year, up from 30.8% a year earlier.

Given that life insurance companies are pivoting toward health insurance products, Samsung Life is leading the pack in boosting health insurance services.

Samsung Card has narrowed the gap with Shinhan Card, the sector leader, posting a net profit of 362.8 billion won, versus Shinhan's 379.3 billion won.

The delinquency ratio of Samsung's credit card users in arrears for more than one month decreased by 0.08 of a percentage point to 0.99% at the end of June from three months before.
 

Net profits of Samsung Group's four financial services arms
	H1 2024 (Unit: billion won)	Year-on-year change
Samsung Life Insurance	1,368.5	40.5%
Samsung Fire & Marine Insurance	1,312.4	8.2%
Samsung Securities	511.0	26.4%
Samsung Card	362.8	24.8%
(Source: Samsung Group)

In the brokerage market, Samsung Securities has ascended to the No. 2 position after Korea Investment & Securities Co. in terms of net profit.

It has been building its presence in the wealth management market for the super-rich. The number of its high-net-worth customers with financial assets of more than 3 billion won has surpassed 4,000, the largest among domestic brokerage companies.

Samsung's advance in the non-banking financial sector is posing a challenge to bank-focused financial services groups. 

"All five major [South Korean] financial holding companies are trying to strengthen their non-bank portfolios by breaking away from the bank-focused structure," said a financial industry official.

"M&As of insurance companies or securities companies will gain more traction."

Write to Hyeong-Gyo Seo at seogyo@hankyung.com
 

Yeonhee Kim edited this article.