President Yoon Calls Bank Work "Servitude"... Major Banks to Disclose 'Bonuses and Severance Pay' on the 31st (Comprehensive)

Record-Breaking Performance by Domestic Banks
18 Banks Submit 'Bank Management Status Disclosure Report' for Last Year
Released by the Korea Federation of Banks on the 31st

[Image source=Yonhap News]

Following President Yoon Seok-yeol's remark about 'being a bank's servant,' banks are on edge. As domestic banks continue to post record-breaking profits day after day, detailed information about the performance bonuses, voluntary retirement payments, and dividend status of executives and employees at major commercial banks, regional banks, and internet banks is being disclosed.

According to the financial industry, the Korea Federation of Banks will release the 'Bank Management Status Disclosure Report' on the 31st. This report covers all 18 member banks of the Federation, excluding the Korea Development Bank. The content to be compiled this time is based on last year's management status. Management status for this year and beyond is scheduled to be compiled and announced by the end of April next year.

Management Status Disclosure on the 31st, Banks on Edge

The report includes basic bank overviews such as total assets, branches, and number of employees, along with details on assets and liabilities, income and expenses, and the use of net income. In particular, the income and expense section must specify interest income including the interest rate spread between loans and deposits, fee income, salaries including performance bonuses and voluntary retirement payments, social contribution achievements, and provisions. The net income section includes capital reserves and dividend status. It shows what the banks do, how they generate income, and how the income is utilized.

This is in accordance with the 'Banking Sector Management and Business Practice Improvement Measures' task force (TF) announced in July, led by the Financial Services Commission and the Financial Supervisory Service.

At that time, the TF expanded the minimum proportion of deferred payment of financial sector executives' performance bonuses from the existing 40% to 50% to prevent a 'performance bonus feast' focused on short-term results. The deferral period was also extended from the original 3 years to 5 years. Additionally, individual registered executives' compensation payment plans must be explained at shareholders' meetings, and disclosure of individual executives' compensation amounts will be strengthened.

President Yoon’s 'Bank Servant' Remark After Bank Money Feast

On the morning of the 30th, during the 45th Cabinet Meeting presided over at the Yongsan Presidential Office, President Yoon said, "I sighed deeply, saying it feels like small business owners struggling with high interest rates are working themselves to death only to hand over all the money they earn to repay loan principal and interest, as if they are servants to the banks."

President Yoon also targeted banks in February. After instructing, "The Financial Services Commission should prepare related measures to prevent public resentment caused by the 'bank money feast'" (February 13, Chief Secretary Meeting), the Financial Supervisory Service and the Financial Services Commission pressured commercial banks to lower interest rates.

This time, the impact is expected to be greater as banks’ performance bonuses and retirement payments are disclosed immediately following President Yoon’s remarks.

Average Executive Performance Bonus Exceeds 100 Million KRW... Strong Performance This Year as Well

According to the Financial Supervisory Service's 'Performance Bonus Status of the Five Major Commercial Banks' data obtained by Asia Economy through the office of Rep. Choi Seung-jae of the People Power Party, major banks paid executives an average performance bonus exceeding 100 million KRW per person last year.

Last year, the average performance bonus for executives at Shinhan, Woori, Hana, and NH Nonghyup Banks was about 128.19 million KRW. Only KB Kookmin Bank among the five major banks did not submit last year's data and was excluded from the calculation.

Looking at the average performance bonus per executive by bank, Shinhan Bank paid 194 million KRW, Woori Bank 128 million KRW, Nonghyup Bank 124 million KRW, and Hana Bank 68 million KRW. For reference, KB Kookmin Bank's average executive performance bonus in 2021 was 228 million KRW.

The major commercial banks also recorded strong performance in the third quarter of this year. Except for Woori Bank, KB Kookmin, Shinhan, and Hana Banks continued their growth by increasing net profits. In particular, banks achieved strong results by earning massive interest income centered on corporate loans amid financial authorities' household loan restraint policies.

The cumulative net income of KB Kookmin, Shinhan, Hana, and Woori Banks for the third quarter reached 10.5107 trillion KRW. This represents a 7.7% growth compared to the same period last year (9.7604 trillion KRW). By bank, KB Kookmin Bank earned 2.8554 trillion KRW, a 12% increase year-on-year for the third quarter cumulative period. Hana Bank grew 23.3% to 2.7664 trillion KRW, Shinhan Bank increased slightly by 0.3% to 2.5991 trillion KRW. Only Woori Bank’s cumulative net income decreased by 3.5% year-on-year to 2.2898 trillion KRW.