South Korean banks posted preliminary first-half net profit of 13.8 trillion won ($10.0 billion) in 2026, down 900 billion won, or 6.4%, from 14.7 trillion won a year earlier, the Financial Supervisory Service (FSS) said in its "2026 First-Half South Korean Bank Operating Results (Preliminary)" released on the 23rd. Interest income rose 8.3% to 32.2 trillion won as interest-earning assets expanded 6.4% and net interest margin increased to 1.56% from 1.52%, but non-interest income fell 43.4% to 2.9 trillion won as securities-related results swung to a 2.5 trillion won loss. Rising yields have continued to erode bond valuations: the 10-year South Korean government bond yield reached 4.335% on the 24th after breaking above 4% in May, compared with the high-3% range at the end of last year. KB Kookmin Bank recorded a 1.09 trillion won ($791.6 million) securities-related loss in the first half, while Shinhan Bank and Woori Bank reported losses of 288.8 billion won ($208.9 million) and 288.5 billion won ($208.7 million), respectively. Banks are responding by reducing spot bond holdings, shortening duration and using derivatives such as put options to limit mark-to-market losses as global and domestic rate pressures persist.