IBK Annual Report 2025

Management Discussion
and Aalysis

Operating Results

Condensed Income Statement (Unit: KRW 100 million, %)

In 2025, IBK’s consolidated net income increased by 2.43% year-on-year to KRW 2,718.9 billion.

Net interest income decreased by 1.81% from the previous year to KRW 7,749.4 billion, driven by a decrease in Won-based net interest margin (NIM) and securities yield caused by falling market interest rates. Conversely, non-interest income increased by 237.09% year-on-year to KRW 816.1 billion, driven by higher fund valuation gains amid a strong equity market, as well as the base effect from exchange rate increases in 2024 and the impact of exchange rate declines during 2025.

Provisions for credit losses increased by 2.97% year-on-year to KRW 1,705.0 billion, reflecting the base effect from preemptive provisioning maintained through 2024 and changes in credit risk parameters in December 2025. Meanwhile, other provisions declined slightly due to the reversal of employee retirement benefit provisions related to ordinary wage adjustments. As a result, total provisions increased marginally by 0.05% year-on-year to KRW 1,727.3 billion.

Net Interest Income (Units: KRW 100 million, %)

In the case of interest revenue, due to the increase in interest-earning assets and the decrease in market interest rates leading to a decrease in NIM, interest revenue decreased by 6.28% year-on-year to KRW 17,764.2 billion, driven primarily by a KRW 1,153.3 billion decline in interest on loan assets.

Interest expenses decreased by 9.47% year-on-year, mainly due to the decrease (KRW 158.8 billion) in interest on deposit liabilities and in interest on debentures (KRW 705 billion).

Net interest income decreased by 1.81% year-on-year to KRW 7,749.4 billion, mainly due to decrease in the Won-denominated NIM and the decrease in securities yield.

Non-Interest Income (Units: KRW 100 million, %)

Driven by a significant increase in gains related to derivatives, non-interest rose by 237.09% year-on-year to KRW 816.1 billion.

Labor and SG&A Expenses (Unit: KRW 100 million, %)

Labor expenses increased by 14.27% year-on-year, amounting to KRW 1,872.6 billion, driven by higher ordinary wage-related costs. SG&A expenses increased by 11.53% year-on-year due to the increase in depreciation expenses following the completion of the IBK Hanam Data Center (December 2024) and the increase in computer & software expenses arising from digital transformation.

Non-Operating Gains/Losses (Unit: KRW 100 million, %)

Non-operating income increased by KRW 35.6 billion year-on-year, due to an increase of KRW 53.1 billion in the valuation of investments in associates and an increase of KRW 3.9 billion in the disposal of investments in associates.

Financial Positions

Condensed Statements of Financial Position (Unit: KRW 100 million, %)

In 2025, IBK remained steadfast to its founding purpose of supporting SMEs and made every effort to assist microbusinesses and SMEs in overcoming crises amid uncertain external environments and challenging business conditions, resulting in the outstanding balance of the bank’s SME loans exceeding KRW 261 trillion.

With an increase in securities by KRW 7,595.3 billion and loan assets by KRW 13,905.8 billion, the total assets increased by 6.03% year-on-year.

In terms of fund sources, borrowings increased by 12.51% compared to the previous year to KRW 50,380.4 billion, and debentures rose by 5.30% year-on-year to reach KRW 203,390.1 billion by the end of 2025.

Breaking down total shareholders’ equity, the KRW 369.4 billion YoY increase in capital came from additional issuance of hybrid Tier 1 securities. However, the bank incurred (i) a KRW 500 million loss from the early redemption (capital adjustment) of KRW 420 billion of hybrid securities in March 2025, which were issued in March 2015 and March 2020; and (ii) a KRW 100 million loss from the early redemption (capital adjustment) of KRW 200 billion of hybrid securities in September 2025, which were issued in September 2015.

Retained earnings increased by KRW 1,803.3 billion year-on-year, reaching KRW 25,396.4 billion.

Loan Assets (Unit: KRW 100 million, %)

Corporate loan balance rose by 5.79% year-on-year to reach KRW 283,995.6 billion, including the KRW 261,878.5 billion in SME loan balance.

Deposit Liabilities (Unit: KRW 100 million, %)

Total deposit liabilities increased by 6.26% year-on-year to KRW 168,163 billion, as Won-denominated deposits increased by 3.28% year-on-year to KRW 139,155.4 billion due to growth in core deposits.

Key Financial Indicators (Unit: %)

* NIM is for IBK on a separate basis.

ROA declined by 3.45% year-on-year to 0.56%, and ROE also decreased by 4.45% year-on-year to 7.71%.

Due to the decrease in the Won-based NIM amid falling market interest rates, the bank's NIM decreased by 12 basis points year-on-year to 1.58%.