IBK Annual Report 2024

MANAGEMENT DISCUSSION
AND ANALYSIS

OPERATING RESULTS

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

In 2024, IBK’s consolidated net income decreased by 0.78% year on year to KRW 2,654.3 billion.

Net interest income decreased by 0.44% from the previous year to KRW 7,891.9 billion, driven by an increase in loan interest and securities interest, as well as an increase in interest expenses such as medium-term bond interest. Non-interest income also decreased by 62.68% year on year to KRW 242.1 billion due to losses on securities.

Provisions for credit losses decreased by 25.25% to KRW 1,655.8 billion compared to the previous year, as the bank proactively accumulated provisions. Additionally, provisions dropped by 29.74% year on year to KRW 1,726.5 billion, influenced by the provisions related to the financial support for people's livelihood (interest cashback) jointly implemented by the banking sector in the previous year.

Interest Income (Unit: KRW 100 million, %)

In the case of interest revenue, due to the increase in interest-earning assets and the rise in market interest rates leading to an increase in NIM, interest on loan assets increased by KRW 590.8 billion (3.22%) compared to the previous year to KRW 18,954.9 billion.

Interest expenses increased by 5.99% year on year due to a decrease of KRW 65.9 billion in interest on deposit liabilities and an increase of KRW 612.5 billion in interest on debentures.

Net interest income increased by 0.44% compared to the previous year to KRW 7,891.9 billion, mainly due to the increase in securities yield and the rise in interest expenses on SME financial bonds.

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

Due to a significant decline in gains on F/X derivatives, net non-interest income decreased by 62.68% compared to the previous year, amounting to KRW 242.1 billion.

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

Labor expenses increased by 5.25% year on year, amounting to KRW 1,638.8 billion. SG&A expenses increased by 4.08% compared to the previous year due to the increase in depreciation expenses following the completion of the 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 gains decreased by KRW 87.3 billion from the previous year, due to a decrease of KRW 30.4 billion in the valuation of investments in associates and a decrease of KRW 19.6 billion in the disposal of investments in associates.

Financial Positions

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

In 2024, IBK remained steadfast to its founding purpose of supporting SMEs and made every effort to assist microbusiness owners 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 240 trillion.

With an increase in securities by KRW 6,013.8 billion and loan assets by KRW 28,017.5 billion, the total assets increased by 5.31% compared to the previous year.

In terms of fund sources, borrowings increased by 8.58% compared to the previous year to KRW 44,777.1 billion, and debentures rose by 6.13% YoY to reach KRW 193,150.8 billion by the end of 2024.

Breaking down total shareholders’ equity, the KRW 179.7 billion YoY increase in capital came from additional issuance of hybrid Tier 1 securities. However, the bank incurred a KRW 300 million loss from the early redemption of KRW 200 billion of hybrid securities issued in 2019.

Retained earnings increased by KRW 1,703.2 billion year on year, reaching KRW 23,593.1 billion.

Loan Assets (Unit: KRW 100 million, %)

IBK continued its commitment to the financial support of SMEs and microbusinesses impacted by the prolonged pandemic. Consequently, the corporate loan balance rose by 5.23% YoY to reach KRW 268,441.9 billion, including the KRW 300,312.1 billion in SME loan balance.

Deposit Liabilities (Unit: KRW 100 million, %)

Total deposit liabilities increased by 2.73% YoY to KRW 158,255.7 billion, as won-denominated deposits increased by 4.84% YoY to KRW 134,732.8 billion due to a contracting balance of core deposits.

Key Financial Indicators (Unit: %)

* NIM is for IBK on a separate basis.

Return on assets (ROA) declined by 4.92% YoY to 0.58%, and return on equity (ROE) also decreased by 10.35% year on year to 8.07%.

Due to the increase in the won-denominated NIS resulting from rising market interest rates, the bank's NIM decreased by 0.09 basis point year on year to 1.70%.