Financial Holding Affiliated Savings Banks Show 'Good' Performance Last Year

Leading Mid-Interest Loans for
Financial Inclusion
Appropriate Ratio of Personal Retail and Corporate Loans
Likely Impact on CEOs' Reappointment Prospects

Shinhan Savings Bank Logo

[Asia Economy Reporter Kim Min-young] Savings banks affiliated with financial holding companies posted strong results last year. Despite increasingly challenging operating conditions in the financial sector, savings banks recorded high growth rates, earning praise for playing a key role within their holding companies.

According to the financial sector on the 17th, four savings banks?Shinhan, KB, Hana, and NH Savings Banks?achieved good performance last year by maintaining their own mid-interest loan products and an appropriate balance between personal retail and corporate loans, even amid a low-interest-rate environment.

Shinhan Savings Bank, under Shinhan Financial Group, posted a net profit of 23.1 billion KRW last year, a 46.2% increase compared to 15.8 billion KRW the previous year. This nearly doubled its performance compared to 11.6 billion KRW in 2016 over three years. KB Savings Bank also earned 16.3 billion KRW, marking a 48.2% surge in net profit from 11 billion KRW the previous year. Although it did not reach the 18.4 billion KRW recorded in 2017, it maintained growth for two consecutive years.

KB Savings Bank logo

NH Savings Bank recorded a net profit of 18.1 billion KRW, up 5.3 billion KRW (41.4%) from 12.8 billion KRW the previous year, while Hana Savings Bank posted 16.1 billion KRW, similar to 16.2 billion KRW the year before.

These savings banks generate stable profits through linked operations with affiliated commercial banks. They maintain loan ratios of around 60% for personal loans and 30% for corporate loans by lending to healthier companies rather than engaging in higher-risk real estate project financing (PF).

After struggling with deficits following the 2011 insolvency crisis, these savings banks have established themselves as valuable subsidiaries within their respective financial holding companies since being incorporated into them.

Additionally, by actively promoting their own mid-interest loan products and government-guaranteed mid-interest products such as the ‘Sa-it-dol Loan,’ they have contributed to improving the negative image of savings banks.

A representative of a financial holding company-affiliated savings bank stated, “As a savings bank belonging to a financial holding company, we focus on policy loans such as mid-interest and Sunshine Loans aimed at revitalizing finance for ordinary citizens, based on linked operations with other affiliates like commercial banks.”

With these savings banks posting strong results, the reappointment prospects for their chief executive officers (CEOs) are expected to gain momentum. Oh Hwa-kyung, CEO of Hana Savings Bank, will have her reappointment decided at the upcoming Hana Financial Group shareholders’ meeting next month. Kim Geon-young, CEO of NH Savings Bank, has a term ending in June. These CEOs, having completed stable two-year terms, are expected to be smoothly reappointed. Previously, in December last year, Kim Young-pyo of Shinhan Savings Bank and Shin Hong-seop of KB Savings Bank both succeeded in securing one-year extensions. Notably, CEO Kim, a former vice president of Shinhan Bank, has been leading Shinhan Savings Bank since his appointment in January 2015, now in his sixth year.