Earnings of South Korean banking groups are likely to fall 29 percent this year from the previous year as lending margins decline amid a long streak of low rates, industry data showed Sunday.

The combined earnings of six banking groups are estimated to reach 5.93 trillion won ($5.62 billion) this year, compared with 8.35 trillion won the previous year, according to the data.

The banking groups include Woori Finance Holdings Co., KB Financial Group, Shinhan Financial Group and Hana Financial Group.

“Lending growth slowed and interest income declined amid low rates, worsening their profitability,” said Koo Kyung-hwe, an analyst at Hyundai Securities Co.

Korean banks have been suffering from weak earnings as a long streak of low rates undercut their net interest margin amid an economic slowdown and increased loan-loss reserves.

But despite weak profitability, local banks saw the number of their staff and labor costs rise, the data showed.

As of end-September, the number of employees in the banking sector reached 102,298, up 3.8 percent from the end of last year, according to the data.

Local banks were also slow in reducing branches whose performances were not good. The number of closed bank branches reached 29, accounting for a mere 0.4 percent of the total in the bank industry. (Yonhap News)