South Korean banks saw their combined net profit from overseas operations shrink 28.8 percent last year from a year earlier due to a drop in interest income amid a global low rates trend, the financial watchdog said Tuesday.

Earnings by 152 overseas units and offices of 11 local lenders stood at $450 million in 2013, compared with $640 million in the previous year, according to the Financial Supervisory Service.

The FSS said the weaker bottom line is a result of contracted interest income when interest rates remain low worldwide while loan loss reserves rose.

Their interest profit fell 1.4 percent on-year to $1.21 billion last year from $1.23 billion.

The banks set aside $430 million for possible bad loans at the end of last year, more than doubling from $200 million in the previous year, the FSS said. (Yonhap)