Discussion on Measures to Promote Social Contribution Activities
Kim So-young, Vice Chairman of the Financial Services Commission, stated regarding banks' social contribution activities, "The banking sector should disclose not only quantitative items but also various qualitative items such as financial consumer education, operation of alternative branches, and the launch of win-win financial products."
According to the Financial Services Commission on the 13th, Vice Chairman Kim attended the 5th Working Group Meeting on Banking Sector Sales, Management Practices, and System Improvement held at the Government Seoul Office in Jongno-gu, Seoul, the previous day, and said, "It is undesirable to improperly measure social contributions such as dormant deposits, disability employment levies, and profit-making activities or to include items that do not align with the purpose of social contribution."
At the meeting held the previous day, Vice Chairman Kim and other attendees shared the current status of social contributions by domestic banks. According to the authorities, the social contribution expenditure of domestic banks amounted to 741.7 billion KRW in 2017, 990.5 billion KRW in 2018, 1.1359 trillion KRW in 2019, 1.0929 trillion KRW in 2020, 1.0617 trillion KRW in 2021, and 1.1305 trillion KRW in 2022. The proportion of social contribution expenditure relative to net income was typically around 6%.
Looking at the detailed breakdown, as of last year, expenditures related to low-income finance accounted for the largest share at 41.4% (467.8 billion KRW). Most of the low-income finance expenditures were dormant deposit contributions made to the Korea Inclusive Finance Agency as mandated by law. Other categories included community and public interest (39.9%), academic and educational (8.9%), patronage and sports (8.3%), environment (0.8%), and global (0.7%).
By bank, NongHyup led with 168.5 billion KRW, followed by KB Kookmin Bank (163 billion KRW), Woori Bank (160.5 billion KRW), Hana Bank (149.3 billion KRW), and Shinhan Bank (139.9 billion KRW). The top five banks accounted for 69.1% (781.2 billion KRW) of the total social contribution expenditure of the banking sector.
Regarding this, attendees pointed out that matters related to profit-making activities are activities for the sustainability of banks rather than social contributions, and thus are difficult to consider as social contribution activities. Opinions were also presented that loans to low- and medium-credit borrowers and caregiver care could be both social contribution activities and future growth engines for banks. Additionally, there were calls to activate disclosure of social contributions to enhance transparency of projects.
The banking sector stated, "We will embed social contribution activities as a win-win with customers and strengthen the linkage with the core functions of finance," adding, "We will also actively strive to ensure no neglect in supporting vulnerable groups such as the elderly and multicultural families."
The meeting also shared the status of social contribution activities of global financial companies. In the case of Citibank, it announced plans to spend a total of 1 trillion USD related to ESG by 2030, along with financial support measures to eliminate racial discrimination. Santander Bank, emphasizing inclusiveness as its slogan, was found to focus on expanding financial accessibility, related educational activities, and scholarship support.
Vice Chairman Kim said, "Social contribution activities, which return a portion of profits back to society to fulfill the banking sector's social responsibility, are essential for creating a sustainable economic environment," and added, "Domestic banks also need to set directions and goals like global financial companies and establish mid- to long-term plans to respond systematically in social contributions."
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