South Korean banks' first-quarter earnings jumped 61.7 percent from a year earlier on increased non-interest income, the financial watchdog said Monday.

The combined net profit of 18 local lenders stood at 2.1 trillion won ($1.9 billion) in the January-March period, compared with 1.3 trillion won the previous year, according to the Financial Supervisory Service.

The strong bottom line came as their non-interest income more than tripled to 1.8 trillion won in the first quarter from 500 billion won a year earlier, the FSS said.

However, their interest income slipped 3 percent on-year to 8.3 trillion won, marking the second consecutive on-quarter drop amid a low interest trend.

The Bank of Korea trimmed the policy rate by a quarter percentage point to a record low of 1.75 percent in March in a bid to support Asia's fourth-largest economy. Last year, the central bank also lowered the rate by a combined 0.5 percentage point.

The net interest margin, a key gauge of profitability, dropped to an all-time low of 1.63 percent, from the previous quarter's 1.73 percent.

The return on assets, another measure of banks' profitability, came in at 0.4 percent in the first quarter, up 0.12 percentage point from a year earlier, the watchdog said. (Yonhap)