Lee Won-duk, Senior Vice President of Woori Financial Group, Appointed as New Woori Bank President
Household Loan Management, Digital Innovation, Mergers and Acquisitions Among Key Challenges
If Appointed at Next Month's General Meeting, Will Begin 2-Year Term as Woori Bank President
[Asia Economy Reporter Song Seung-seop] Financial industry attention is focused on Lee Won-duk, the senior vice president of Woori Financial Group, who has been solely nominated as the new candidate for Woori Bank president. This is because he has been tasked with solving pressing issues facing Woori Bank, including household loan risk management, digital innovation, and mergers and acquisitions (M&A). While addressing these numerous challenges, the key will be to lay the foundation for becoming a 'comprehensive financial institution' in the first year of full privatization.
According to the financial sector on the 8th, the Woori Financial Group subsidiary CEO candidate recommendation committee (Jachu-wi) solely recommended Senior Vice President Lee as the next candidate for Woori Bank president. Lee joined the bank in 1990 and has held positions such as senior deputy head of the strategic planning team, senior inspector in the audit office, head of global strategy at Woori Financial Group, head of future strategy at Woori Bank (head of sales headquarters), director of the future strategy team, and senior vice president of the strategy division at Woori Financial Group. Within the bank, he is regarded as a representative 'strategy and planning' expert.
A Jachu-wi official explained the reason for the recommendation, saying, "As the senior vice president of the holding company, he is responsible for key core tasks within the group (strategy, finance, M&A, digital, funds, etc.) and has a broad understanding of the entire group. In a situation where platform competitiveness is becoming a core competitive factor, his experience as chairman of the group’s digital innovation subcommittee was highly evaluated."
Once his official term begins, Candidate Lee is also expected to focus on transitioning the system to digital. Woori Bank must compete in platform battles not only with commercial banks but also with internet-only banks and big tech companies. Accordingly, last year, the bank concentrated on digital innovation based on technologies such as artificial intelligence (AI), blockchain, cloud, and data. External experts were recruited, and organizational restructuring was carried out to facilitate the bank’s digital transformation.
Securing MZ generation customers, who have emerged as major clients in the financial sector, is also a key task. The MZ generation constitutes the largest proportion of the total population and, unlike in the past, shows active interest in finance, intensifying competition among banks to attract them.
At the group level, there is the issue of non-bank (securities and insurance) M&A, which Woori Financial Group needs to supplement through collaboration with the financial holding company. Since the launch of the holding company system in January 2019, Woori Financial Group has incorporated non-bank subsidiaries such as savings banks, asset trusts, and capital companies into the holding company. As it is the only major financial group without securities and insurance companies, M&A is essential to complete the comprehensive financial group.
Manage Risks and Sustain Strong Performance
Since Woori Bank accounts for about 80% of the financial holding company, coordination between the holding company chairman and the bank president is inevitably important for major issues like M&A. A commercial bank official said, "Candidate Lee worked with Woori Financial Group Chairman Sohn Tae-seung since Sohn was head of the bank’s strategic planning team, and they have followed similar career paths in strategy and global roles. Having worked together on the holding company system, they will focus on creating synergy between the holding company and the bank."
To surpass the record-breaking performance already achieved, strengthening the non-interest income sector is essential. Woori Bank’s cumulative net profit for the first three quarters of last year was 1.9867 trillion won, a 68% increase from a year earlier, the steepest rise among commercial banks. To maintain this momentum, improving the non-interest income sector to diversify revenue sources is urgent. Chairman Sohn also identified 'wealth management (WM)' and 'corporate and investment banking (CIB)' as core growth drivers in his New Year's address.
Competition in the mid-interest loan market and corporate finance sector is expected to intensify further due to financial authorities’ orders to manage household debt and strengthened loan regulations. The annual household debt growth rate, capped at 6.9% last year, has been lowered to 4-5% this year. Since last month, the total debt service ratio (DSR) regulation applies when total household loans exceed 200 million won, and this threshold will be tightened to 100 million won starting in July. This means that opportunities must be sought in mid-interest loans, which are exceptions to total volume regulations, or in corporate finance, which is excluded from household debt policies.
At the same time, the 'soundness' enhancement efforts continuously requested by the government and financial authorities must be carried out. Financial support measures for small business owners and self-employed individuals are likely to end in principle by March. The five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?have extended maturities and deferred principal and interest repayments totaling over 139 trillion won to support COVID-19 relief. Measures are needed to prevent default risks within banks and transmission within the financial group.
If Candidate Lee is appointed at the shareholders’ meeting next month, he will begin his two-year term as Woori Bank president starting in March.
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