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Issuer Credit Research

Issuer Flash: KEB Hana Bank / Hana Bank

Issuer: Keb Hana Bank | Document: Issuer Flash | Date: 2026-11-02 | Event: 3q2026 Results

Report date: 2026-11-02 Event date: 2026-10-23 Event title: Q3 2026 Results

1. Flash Conclusion

Hana Bank's third-quarter results present a mixed credit update. Quarterly net income increased to KRW 1.195tn from KRW 1.017tn in the second quarter, while the reported total non-performing loan (NPL) ratio edged down to 0.478% from 0.485% and loan-loss-reserve coverage improved to 106.5% from 100.4%. The bank's CET1 ratio recovered to 16.91% from 15.95%, largely alongside a reduction in risk-weighted assets (RWA). These changes support the established view of a large operating bank with material earnings and reported capital capacity.

The apparent stabilisation in the aggregate NPL ratio does not resolve the asset-quality concerns raised in the August flash. Corporate NPLs rose and the corporate NPL ratio increased to 0.632% from 0.610%, while the overall delinquency ratio rose to 0.512% from 0.400%. Household NPLs fell, offsetting the corporate increase in the total. The September result therefore supports retaining the existing senior operating-bank credit view, with corporate credit migration and provisioning remaining central monitoring issues. The data do not establish an imminent loss, but neither do they demonstrate that the earlier deterioration has ended.

For bondholders, the improvement in capital ratios is a meaningful reported buffer, not a measurement of available regulatory headroom. This review does not establish current individual instrument triggers, foreign-currency liquidity or the distribution of corporate problem exposures. Holding-company debt and subordinated bank instruments require separate analysis.

2. Earnings and Funding

Hana Financial Group's 3Q26 IR Databook reports bank consolidated, rather than group consolidated, income and balance-sheet figures. Hana Bank's quarterly net interest income increased to KRW 2.313tn from KRW 2.280tn in Q2, while general operating income rose to KRW 2.626tn from KRW 2.543tn. Quarterly pre-provision operating profit increased to KRW 1.718tn from KRW 1.578tn. The bank reported KRW 181.3bn in credit loss provision for Q3, down from KRW 251.1bn in Q2, and nine-month net income of KRW 3.316tn.

The earnings improvement is useful loss-absorption capacity, but not evidence that future credit costs have normalised. A lower Q3 provision charge followed a pronounced second-quarter increase. The previous flash cited a KRW 228.6bn Q2 loan-loss provision; the KRW 251.1bn comparison here is the separately labelled credit-loss-provision line in the latest Databook and should not be treated as the same measure. Also, quarterly net interest margin declined to 1.57% from 1.61%, although it remained above 1.50% in Q3 2025. The increase in interest income alongside a lower quarterly margin underscores the need to watch both asset volumes and funding costs; this disclosure alone does not establish the cause of the margin movement or its persistence.

Balance-sheet deposits declined to KRW 398.8tn at September-end from KRW 408.6tn at June-end, while loans receivable fell to KRW 388.6tn from KRW 398.1tn. Deposits remained a large funding base, but the quarter-on-quarter reduction merits attention. On the separately defined bank-accounting deposit series, low-cost deposits declined to KRW 125.9tn from KRW 133.7tn, while time deposits rose to KRW 192.9tn from KRW 189.3tn. These series are not interchangeable with the balance-sheet deposit total. Their movements are consistent with a less favourable deposit mix, but do not independently establish deposit outflows under stress, liquidity coverage or foreign-currency funding access.

3. Asset Quality and Capital

Bank metric End-June 2026 End-September 2026 Credit reading
Total NPL ratio 0.485% 0.478% Marginally lower, but above the 0.367% reported at March-end.
Corporate NPL ratio 0.610% 0.632% Further deterioration despite the aggregate improvement.
Household NPL ratio 0.276% 0.228% Improvement helped offset the corporate trend.
NPL coverage, loan-loss reserves 100.4% 106.5% Higher reported coverage; separate credit-loss reserves are excluded from this ratio.
Total delinquency ratio 0.400% 0.512% Higher early-warning pressure, including on corporate loans.
CET1 ratio 15.95% 16.91% Improved alongside a decline in RWA.
BIS total capital ratio 16.91% 17.88% Higher reported ratio; applicable requirement and usable headroom not assessed.

The headline NPL stock decreased to KRW 1.822tn from KRW 1.852tn. That modest decline masks different movements by borrower category: corporate NPLs increased to KRW 1.492tn from KRW 1.457tn, while household NPLs decreased to KRW 330bn from KRW 395bn. Corporate precautionary-and-below exposures also increased to KRW 3.566tn from KRW 3.313tn. The Databook breaks delinquency down by borrower category, including large corporates and SMEs, but the figures reviewed do not identify the individual exposures, industry concentrations, collateral or specific drivers behind the changes. They should not be used to infer a specific property-finance loss or a bank-wide default cycle.

Delinquency warrants particular attention because it moved adversely while the total NPL ratio improved. Corporate delinquency rose to 0.632% from 0.457%; within that figure, the large-corporate rate increased from 0.113% to 0.529% and the SME rate from 0.592% to 0.671%. A percentage movement from a low base does not establish the eventual loss on any exposure. Follow-up should determine whether overdue balances cure, migrate into NPLs, or are resolved, and what collateral and provisions cover them.

Loan-loss reserves increased to KRW 1.941tn from KRW 1.859tn, improving the disclosed coverage ratio as the aggregate NPL stock fell. The Databook also separately reports credit-loss reserves of KRW 2.402tn. Their existence is relevant context but should not be added mechanically to the reported coverage percentage without confirming definitions and regulatory treatment. The coverage improvement is a partial offset to corporate migration, rather than a complete assessment of collateral-adjusted loss absorption.

Capital ratios also improved. CET1 capital increased modestly to KRW 35.02tn from KRW 34.73tn, while RWA decreased to KRW 207.09tn from KRW 217.76tn. The ratio increase therefore reflects both a higher CET1 numerator and a substantially lower RWA denominator. The materials reviewed do not establish the drivers or durability of the RWA decline, or the distance from the bank's applicable requirements. A subsequent rise in credit costs or RWA could reduce the reported buffer; the ratios should be monitored together rather than extrapolated as a permanent improvement.

The prior flash cited June CET1 and BIS ratios of 15.93% and 16.89%, respectively. This report consistently uses the latest 3Q Databook's June comparative values of 15.95% and 16.91%; the reason for the small differences from the earlier reported values has not been established. The conclusion that the September ratios increased is unchanged under either comparison.

4. What To Watch Next

5. Sources

Unconfirmed Items