Banks - Korea: 2Q26 preview: resilient earnings on track

Research evidence excerpt

Banks - Korea: 2Q26 preview: resilient earnings on track

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Banks - Korea

2Q26 preview: resilient earnings on track

Price Objective Change

Expect another quarter of solid earnings 07 July 2026

Korean banks are scheduled to report 2Q earnings from the week of 20 July. We expect Equity

the banks under our coverage to collectively post 8.4% QoQ and 6.0% YoY growth in Republic of Korea

2Q26 net profit, supported by stable NIMs, improving loan growth, healthy non-interest Banks

income, and no significant asset quality issues. On the back of solid earnings growth, we Jisun Lee >>

expect continued expansion in group RoE across Korean banks, further enhancing their Research Analyst

shareholder return capacity. Our top pick in the sector remains KB, which is well Merrill+82 2 3707Lynch0418(Seoul)

positioned to benefit from the current favorable market environment, given its well- jisun.lee@bofa.com

diversified non-banking portfolio and strongest capital ratio in the sector. Simon Woo, CFA >>

Research Analyst

Merrill Lynch (Seoul)

+82 2 3707 0554NIMs look resilient; loan growth improving

simon.woo@bofa.com

The BoK spread data suggests a continued positive trajectory for banks' NIMs. While

both backbook funding costs and lending rates have been rising, the increase in lending

rates has slightly outpaced that in funding costs since March 2026, keeping spreads

Exhibit 1: Earnings season set to begin

broadly steady. Accordingly, we believe NIMs will likely be largely stable to slightly higher with Shinhan

QoQ in 2Q26. The BoK data also suggests a gradual improvement in loan growth, with Earnings reporting date

system loans growing 1.2% QTD as of May, compared with 0.9% at end-March. Although