[Weekly Savings Banks] Bank-affiliated Savings Banks Perform Well in Q3... "Effect of Non-face-to-face Services"

[Asia Economy Reporter Kim Min-young] Savings banks affiliated with financial holding companies posted strong results in the third quarter of this year. The activation of non-face-to-face (untact) finance due to the novel coronavirus disease (COVID-19) created a trickle-down effect even for savings banks.

According to the financial sector on the 31st, Hana Savings Bank, an affiliate of Hana Financial Group, recorded a cumulative net profit of 13.4 billion KRW in the third quarter of this year. This represents a 20.7% growth compared to 11.1 billion KRW in the same period last year.

Shinhan Savings Bank, under Shinhan Financial Group, also earned 23 billion KRW cumulatively in the third quarter, an 11.5% increase from 20.6 billion KRW in the same period last year.

NH Savings Bank, a subsidiary of NH Nonghyup Financial Group, achieved a cumulative net profit of 16.2 billion KRW in the third quarter, growing 24.6% from 13 billion KRW in the same period last year.

KB Savings Bank, affiliated with KB Financial Group, posted a net profit of 13.2 billion KRW, slightly down from 13.4 billion KRW in the same period last year, but still maintained a similar level despite the impact of COVID-19, showing resilience.

Each financial holding company acquired two to three savings banks that were on the brink of closure due to a large-scale insolvency crisis in 2011 and incorporated them as affiliates. Although these were initially seen as 'troublesome' entities incurring losses right after acquisition, they turned profitable as bank-experienced CEOs reorganized the organizations and boosted employee morale.

Kim Young-pyo, former vice president of Shinhan Bank, has been leading Shinhan Savings Bank since 2015 with four consecutive reappointments. Shin Hong-seop, former executive director of KB Kookmin Bank and CEO of KB Savings Bank, has been leading innovation in the industry, even personally attending the world's largest electronics show, CES, last year.

Industry insiders explain that the performance of these savings banks is thanks to business operations utilizing untact methods and the expansion of mid-interest rate loans. KB Savings Bank launched its own application, 'Kiwi Bank,' in July, tripling its mid-interest loan performance, and the number of subscribers to the newly introduced 'Kiwi Deposit and Withdrawal Account' is steadily increasing.

Shinhan and Hana Savings Banks are also seeing smooth sales of loans and deposits through their affiliated banks' apps, 'SOL' and 'Hana One Q,' respectively.

These savings banks, as model students of the industry, also offer relatively low interest rates on household credit loans. As of last month, the average credit loan interest rates were 12.77% for KB, 14.29% for Shinhan, and 15.69% for Hana, with an overall average of 14.25%, which is 2.19 percentage points lower than the average loan interest rate (16.44%) of major savings banks (17 companies).

Going forward, savings banks affiliated with financial holding companies are expected to contribute to improving the industry's negative image by expanding mid-interest rate loans and supplying funds to middle- and low-credit borrowers, small and medium-sized enterprises, and small business owners. A senior industry official stated, "Despite the difficult crisis, having achieved record-high performance, we will ensure that these results benefit financial consumers by expanding mid-interest and small business loans."