Comparison of Business Reports from 4 Major Banks... Status of Owned Operating Land and Building Assets
Book Value Ranking: Kookmin > Woori > Hana > Shinhan
Active Sale of Idle Real Estate Due to Offline Branch Consolidation
[Asia Economy Reporter Park Sun-mi] Amid the accelerating trend of bank branch consolidations and closures, KB Kookmin Bank has been confirmed to hold the largest amount of real estate in the industry. The book value of real estate, including headquarters and branches (including sub-branches), held by the four major domestic banks?KB Kookmin, Shinhan, Hana, and Woori?exceeded a total of 9 trillion KRW.
According to the 2020 business reports disclosed on the Financial Supervisory Service's electronic disclosure system by the four major domestic banks on the 19th, Kookmin Bank recorded a total book value of 3.2051 trillion KRW in domestic real estate holdings as of the end of last year. The book value of land for headquarters and branches was 1.9654 trillion KRW, and the book value of buildings was 1.2397 trillion KRW. As of the end of last year, Kookmin Bank operated a total of 972 outlets, including 884 branches and 88 sub-branches.
Following Kookmin Bank, Woori Bank holds the second-largest amount of real estate. Woori Bank owns business facilities worth a total of 2.4473 trillion KRW, with land assets valued at 1.5219 trillion KRW and building assets at 925.3 billion KRW. The real estate value of the headquarters land and buildings is 706.6 billion KRW, and combined with branches, the total real estate holdings amount to 2.4473 trillion KRW. Woori Bank operates a total of 821 business points, including 715 branches and 106 sub-branches.
Hana Bank's headquarters land and building book value is 332.1 billion KRW, and combined with 651 branches and sub-branches, the total real estate holdings amount to 1.8655 trillion KRW. Shinhan Bank recorded a land and building value of 844.6 billion KRW for its headquarters and owns real estate worth a total of 1.8073 trillion KRW, including 860 domestic branches, sub-branches, and offices.
Active Sale of Idle Real Estate Due to Offline Branch Consolidations
Real estate owned by banks, including headquarters and branches, which have no other business facilities besides branches, serves as a useful means of liquidity. Banks, pressured by profitability due to prolonged low interest rates, can liquidate or generate rental income from idle real estate amid the trend of branch consolidations. Selling these properties also reduces branch maintenance costs, improving asset management efficiency.
With the increase in non-face-to-face transactions such as internet and mobile banking due to COVID-19 and the expansion of duplicate branch closures, the number of disappearing bank branches is steadily increasing. The number of domestic bank branches decreased continuously from 7,281 in 2015 to 7,101 in 2017, 6,709 in 2019, and 6,406 in 2020. Last year, 303 bank branches were closed.
In fact, as non-face-to-face transactions have expanded recently, the consolidation and closure of offline branches have accelerated, leading to an increasing number of banks selling their idle real estate.
According to Onbid, the public auction system of the Korea Asset Management Corporation (KAMCO), Kookmin Bank announced last month that it would sell real estate of seven branches and sub-branches. The properties for sale include land and real estate where branches were located in Sindang-dong and Munjeong-dong in Seoul, Gongju and Nonsan in Chungnam, Yeongcheon in Gyeongbuk, Gimhae in Gyeongnam, and Yeosu in Jeonnam. The minimum bid amount is approximately 17.9 billion KRW. Although the first quarter is not yet over, the four major banks have already conducted or announced bids for 16 real estate properties this year, with a minimum bid amount totaling 49.563 billion KRW, nearly half of last year's sales volume of 120 billion KRW.
Industry insiders expect that the trend of banks selling real estate to liquidate assets will become more active for the time being, as real estate prices continue to rise and the number of idle properties increases due to branch consolidations. A bank official explained, "Operating branches requires various taxes and maintenance costs. When branches are consolidated and their utility decreases, banks consider selling real estate to improve asset management efficiency." He added, "The recent trend of reducing the number of bank branches also leads to an increase in the sale of idle real estate."
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