JT Chin-ae, Interim Dividend After 8 Years in Korea
Japanese SBI Has Never Paid Dividends
No Capacity Due to 1 Trillion Won Loss Write-off
[Asia Economy Reporter Kim Min-young] There is a savings bank that looks enviously at JT Chin-Ae Savings Bank, which conducted its first dividend payout after more than eight years since entering the Korean market. That is SBI Savings Bank, also of Japanese origin. Despite the major shareholder investing a huge sum of 1.35 trillion won at the time of acquisition, this savings bank has yet to return any investment through dividends.
According to the financial sector on the 29th, JT Chin-Ae Savings Bank recently paid an interim dividend of 1,270 won per share. The total dividend amount was 18.2118 billion won. This money was taken by J Trust Card, a subsidiary of the Japanese financial company J Trust Group, which holds 100% of JT Chin-Ae Savings Bank’s shares.
This is the first time the savings bank has paid dividends since acquiring Mirae Savings Bank in 2012. It is also the first dividend payout by a savings bank with Japanese capital as the major shareholder.
JT Chin-Ae Savings Bank explained that the dividend was made based on the judgment that securing funds at the shareholder level was necessary as the parent group’s Southeast Asian affiliates were facing difficulties.
Whether foreign or domestic capital, it is common for savings banks to pay dividends to major shareholders, but the fact that the major shareholder is ‘Japanese’ made JT Chin-Ae’s dividend a hot topic.
Just this year, Eugene Savings Bank conducted a settlement dividend of 11.5 billion won, and Incheon Savings Bank, Daemyung Savings Bank in Chungbuk, and Jinju Savings Bank in Gyeongnam also paid dividends to their major shareholders.
Last year, Sangsangin Plus Savings Bank and Sangsangin Savings Bank paid settlement dividends of 45 billion won and 47 billion won respectively, and in 2018, Accuon Savings Bank paid 40.2 billion won in dividends to its major shareholder, a foreign private equity fund.
SBI Savings Bank is merely watching other savings banks’ dividends. SBI Savings Bank was established in 2013 when SBI Holdings acquired Hyundai Swiss 1~4 Savings Banks for 1.35 trillion won. The accumulated deficit taken on after acquisition reached 1 trillion won, so even when making profits, the bank has no capacity to pay dividends as it must cover the deficit.
SBI Savings Bank turned a profit of 16.6 billion won in 2015, just two years after its launch, and has since posted record-high earnings. It earned 73.9 billion won in 2016, 88.8 billion won in 2017, 130.9 billion won in 2018, and 188.2 billion won last year, rising to the top of the industry in terms of net profit and asset size. Nevertheless, deficits still remain. As of the end of last year, the unresolved deficit amounted to 209.053412 billion won.
The savings bank expects to fully repay the deficit by the first quarter of next year, but whether it can pay dividends afterward remains uncertain. Since the major shareholder is Japanese, it must consider the negative public opinion.
With JT Chin-Ae Savings Bank setting a precedent by paying dividends for the first time, the industry expects that savings banks with Japanese major shareholders will follow suit. A financial sector official said, “Who would invest in domestic financial companies if they cannot receive even a single won in dividends after investing over 1 trillion won to make them industry leaders?” adding, “Even if not as much as the investment, creating cash flow through dividends is necessary to invigorate investment across the industry.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
