President Yoon: "Working as a bank servant"... Major banks to reveal 'bonuses and retirement pay' this week (Comprehensive 2)

Domestic Banks Achieve Record-Breaking Profits

18 Banks Submit 'Bank Management Status Disclosure Report'
Includes Employee Bonuses, Voluntary Retirement Payments, Dividend Status

Originally Scheduled for Release on the 31st
Shifted to 'This Week' Due to Concerns Over Impact

[Image source=Yonhap News]

"Small business owners struggling with high interest rates sigh deeply, saying it feels like they are working as slaves to banks, as they hand over all the money they earn from hard work to repay loan principal and interest." (President Yoon Suk-yeol on the 30th)

Following President Yoon Suk-yeol's remark about 'working as slaves to banks,' banks are on edge. This is because detailed information about employee bonuses, voluntary retirement payments, and dividend statuses of major commercial banks, regional banks, and internet banks is being disclosed amid the domestic banking sector posting record-breaking profits day after day.

Bankers Association: "Report to be Released Within This Week"

According to the financial industry, the Korea Federation of Banks plans to release the 'Bank Management Status Disclosure Report' within this week. The five major banks (KB, Shinhan, Hana, Woori, NH Nonghyup) originally planned to announce the report on the 31st. However, it appears the release was temporarily postponed due to concerns about the negative impact that revealing bonuses and retirement payments right after President Yoon's 'bank slave' comment might cause.

Officials from the Korea Federation of Banks and the Financial Services Commission stated, "The report is expected to be disclosed as early as November 1st, or at the latest within this week." The report will cover all 18 member banks of the Federation except the Korea Development Bank. The content will be based on last year's management status. Management status for this year will be compiled and announced by the end of April next year.

The report will include an overview of banks such as total assets, branches, and number of employees, as well as 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 bonuses and voluntary retirement payments, social contribution performance, and provisions. The net income section will include capital reserves and dividend status. It will show what banks do, how they generate income, and how the income is utilized.

This follows the 'Banking Sector Management and Business Practice Improvement Plan' task force (TF) led by the Financial Services Commission and the Financial Supervisory Service in July. At that time, the TF expanded the minimum deferred payment ratio of bonuses for financial executives from the existing 40% to 50% to prevent a 'bonus feast' focused on short-term performance. The deferral period was also extended from 3 years to 5 years. Additionally, individual registered executives must explain their compensation payment plans at shareholders' meetings, and disclosure of individual executive compensation amounts will be strengthened.

[Image source=Yonhap News]

Last Year’s Average Executive Bonus Exceeds 100 Million KRW... Strong Performance This Year Too

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

Last year, the average executive bonus at Shinhan, Woori, Hana, and NH Nonghyup banks was approximately 128.19 million KRW. KB Kookmin Bank was excluded from the calculation as it did not submit last year's data among the five major banks.

Looking at the average executive bonus by bank, Shinhan Bank paid 194 million KRW, Woori Bank 128 million KRW, Nonghyup 124 million KRW, and Hana Bank 68 million KRW. For reference, KB Kookmin Bank’s average executive 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 earned massive interest income centered on corporate loans amid financial authorities’ household loan restriction 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, up 12% year-on-year for the third quarter cumulative period. Hana Bank grew 23.3% to 2.7664 trillion KRW, Shinhan Bank increased 0.3% to 2.5991 trillion KRW. Only Woori Bank’s cumulative net income decreased 3.5% year-on-year to 2.2898 trillion KRW.