Financial Holding Company Savings Banks See Net Profit Jump Over 40% in One Year (Comprehensive)

Shinhan, KB, NH Savings Banks Surge 41~48%
Only Hana Savings Bank Maintains Similar Level to Previous Year

Asia Economy DB.

[Asia Economy Reporter Kim Min-young] Savings banks affiliated with financial holding companies received a "good report card" last year. Despite the increasingly challenging financial industry environment, savings banks showed strong growth, earning high praise as key contributors within their holding companies.

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

Shinhan Savings Bank, under Shinhan Financial Group, recorded 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 over three years since 2016, when it posted 11.6 billion KRW. KB Savings Bank also earned 16.3 billion KRW, marking a 48.2% surge 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.

NH Savings Bank posted 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 recorded 16.1 billion KRW, similar to the previous year's 16.2 billion KRW.

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).

Since the 2011 insolvency crisis, these savings banks, which struggled with deficits, have established themselves as valuable subsidiaries after being incorporated into financial holding companies.

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 said, "As a savings bank under a financial holding company, we focus on policy loans such as mid-interest loans and Sunshine Loans aimed at revitalizing financial services for ordinary citizens, based on linked operations with other affiliates like commercial banks."

With these savings banks receiving good results, the reappointment prospects for their 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 one-year reappointments. Notably, Kim, a former vice president of Shinhan Bank, has led Shinhan Savings Bank since January 2015, earning the reputation as a 'long-serving CEO' in the savings bank sector.