SOUTH KOREA BANKS: In a sweet spot amid increased market volatility

Research evidence excerpt

SOUTH KOREA BANKS: In a sweet spot amid increased market volatility

Equity Research

28 June 2026 | 4:17PM KST

SOUTH KOREA BANKS

In a sweet spot amid increased market volatility

More rate hikes ahead, projecting a bigger NIM expansion Sinyoung Park

+82(2)3788-1778 |

On a stronger and more durable AI impulse through capex, R&D, and wealth effects, sinyoung.park@gs.com

Goldman Sachs (Asia) L.L.C., Seoul Branch

our economists extended the hiking cycle into 2027 and lifted their terminal policy

rate forecast to 3.25% (from 3.0%). With ample liquidity supporting a benign

environment for deposit funding and given KR banks’ asset-sensitive balance sheet,

we assume a bigger NIM expansion (8 bp/5bp in 2026E/27E vs. +5bp/flat previously)

and project net interest income to grow +9%/7% y-o-y in 2026E/27E.

Wealth effect can act as a tailwind to brokerage earnings and asset quality

While the domestic transmission remains uneven, we think record-high exports (on

track to exceed USD1tr in 2026E), wage spillovers and the stock market rally could

bolster household balance sheets and stimulate domestic consumption. With tight

mortgage lending regulations, the retail money move into capital markets could

continue and sustain brokerage strength (Shinhan/KB Sec reaching c20% ROE in

1Q26), in our view. Moreover, we believe positive wealth effects and income buffers

will help mitigate delinquency pressures and support banks’ asset quality outlook.

Consensus estimates not fully reflective of strengthening earnings momentum

With the consensus average ROE for the top 4 banks staying below 10% mark, we

believe the bigger NIM expansion potential and positive wealth effect are not fully

factored in (especially against 14%/12%/11%/11% 1Q26 recurring ROE at

KB/Shinhan/Hana/Woori).