South Korean banks posted net losses in the second quarter due to negative effects from the ongoing restructuring process in troubled shipbuilding and shipping industries, financial watchdog data showed on Thursday.
Banks posted a net loss of 400 billion won (360 million U.S. dollars) in the April-June period as policy lenders posted massive losses that offset net profits from commercial banks, according to the Financial Supervisory Service (FSS). It was a downturn from net profits of 2.3 trillion won in the previous quarter and 2.2 trillion won a year earlier.
Commercial banks posted a net profit of 1.6 trillion won in the second quarter, but state-run lenders, including the Korea Development Bank and the Export-Import Bank of Korea, recorded 2 trillion won in net loss.
The policy lenders set apart 5.2 trillion won in loan loss reserves amid the ongoing drive by the government to reorganize shipbuilders and shipping lines. Costs for loan loss reserves in overall banks increased to 6.3 trillion won in the second quarter from 2.2 trillion won a year ago.
Hanjin Shipping, the country's largest container shipping line, entered court receivership on Wednesday after creditors refused to provide further lending to the debt-ridden company.
The shipper had struggled with growing debts caused by a slump in global trade that led to falling orders and worsening earnings. Hanjin registered losses for four of the past five years.
Major shipbuilders, including Hyundai Heavy Industry, Samsung Heavy Industry and Daewoo Shipbuilding & Marine Engineering, had submitted their respective reorganization plans to the government, pledging to cut workforce by 30 percent and reduce overcapacity by 20 percent by the end of 2018.
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