Preliminary figures show domestic banks’ net income for the first half of 2006 will come to KRW8.09 trillion, up 23.4% or KRW1.54 trillion from KRW6.55 trillion a year earlier. An 8.5% or KRW1.1 trillion increase in interest income driven by continued loan growth as well as a 50.3% or KRW1.2 trillion drop in loan loss provisions mainly contributed to the robust earnings for the period.

Net interest income for H1 totaled KRW14.5 trillion, up 8.5% from a year earlier, and made up 86.6% of the gross income for the period. Non-interest income jumped 6.3% to KRW2.3 trillion from KRW2.1 trillion a year earlier.

As a result of the sharply higher H1 net income, the average ROA jumped from

1.26% in H1, 2005, to 1.40%. The gross income/asset ratio fell slightly from 2.98% to 2.92%, while the net income/gross income ratio averaged 48.1%, compared with 42.2% a year earlier. Narrower interest margins (from 3.11% to 2.95%) most likely contributed to the modest drop of the gross income/asset ratio for the period despite a continued growth of loan assets.

* Please refer to the attached PDF for details.