Bank stocks fell sharply by more than 14.57% from the day before yesterday, and the market’s attention has continued to wane. The KRX bank index showed a general weakness in major names such as Shinhan Bank (-19.42%), Woori Bank (-16.19%), Hana Bank (-13.54%) and KB Bank (-12.8%). Analysts attribute this to the fact that borrowing costs have expanded due to higher interest rates.
In the latest quarter, Hana Bank’s net interest margin (NIM) fell 0.05 percentage points to 1.83% from 1.88%, while Woori Bank’s NIM slipped 0.07 points to 1.68%. The decline is a direct result of lower loan growth; the higher borrowing costs have prompted price adjustments as regulators signal that interest‑rate limits are likely. Hana Securities’ research division said, “Because NIM fell sharply, the momentum seen in previous quarters could not be sustained and both banks’ performance remained below expectations.”
On an analytical level, while a rise in rates is reflected in the broader market and might eventually improve profitability, the short‑term outlook remains that bank stocks will keep wane. The fact that U.S. 10‑year Treasury yields have risen about 5 percent relative to last year has weakened the high‑rate defensive appeal of banks, thus influencing price.
However, performance is expected to improve from the fourth quarter onward, and the improvement in CET1 (core equity ratio) is seen as surpassing expectations.
From a forward view, NIM will likely improve after a lag due to higher rates, and if we consider that the sector’s earnings have rebounded in the third quarter, then bank NIM may turn positive from the fourth quarter through next year. The increased capital base should lift future profit and help the return on equity (ROE) rise.