Profits down 70% at Kookmin Bank

30 July 2007

South Korea's largest bank Kookmin Bank has reported a 70 per cent fall in second-quarter profit, as back taxes and a cut in fees dented the firm's performance.

The lender's income for the quarter stood at $256 million - down from £847 million for the year ago period.

The firm's profits were hit by taxes of $480 million, resulting from the bank's dispute with the Korean tax authorities over its accounting method for provisions when it consolidated its credit card division in 2003.

Meanwhile, income was hit further by the firm's cutting of interest margins as it seeks to win back custom in an increasingly competitive market. In particular, the firm has been losing custom as clients opt for brokerage accounts for exposure to growing stock markets.

Following a reduction in retail service charges in March, in mid-June the firm also cut fees from investment fund sales by ten per cent.

Kookmin is expected to appeal the National Tax Service's order to pay the back taxes.

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