Next CEO to be Decided at Late March General Meeting
Hong, the Growth-Driving CEO, "New Leadership Needed"
Annual Surplus Achieved, Soundness Management Remains a Task
Hong Min-taek, the CEO who led the growth of Toss Bank as its first bank president, has expressed his intention to resign at the end of his term next month. Toss Bank plans to select the next CEO through the Executive Nomination Committee (ENC) within the board of directors. According to the articles of association, the ENC manages the pool of candidates, with a high proportion of internal candidates. The next CEO, to be elected through the shareholders' meeting in March, faces challenges such as achieving annual profitability and managing soundness.
According to Toss Bank on the 16th, CEO Hong announced at a communication meeting with employees the previous day that he plans to resign as of the 28th of next month. He stated, "I judged that the bank, entering a new phase, needs new leadership." Born in 1982, Hong graduated from KAIST with a degree in Industrial Engineering, worked at IBM and Deloitte, and was in charge of Samsung Pay at Samsung Electronics. He joined Viva Republica in 2017 and became the CEO of the Toss Bank preparatory corporation in January 2021.
Hong Min-taek, CEO of Toss Bank, held a press conference on the 5th at the Conrad Hotel in Yeouido, Seoul, introducing management achievements and more. Photo by Hyunmin Kim kimhyun81@
Hong is credited with successfully leading Toss Bank, the latest entrant among the three major internet banks, to turn a quarterly profit within two years of its launch. He notably accelerated growth by launching innovative products. Toss Bank was the first internet bank to introduce the "interest-first fixed deposit." Within 170 days of launch, it recorded deposits of 4 trillion KRW and total interest of 63 billion KRW. Recently, it launched a foreign currency account boasting the banking industry's first-ever "lifetime free currency exchange fee."
Under Hong's leadership, Toss Bank grew rapidly. The number of customers surpassed 9 million last month, closely trailing K-Bank (9.53 million as of the end of last year). Its asset size stands at 24.6973 trillion KRW, with loan and deposit balances at 12.35 trillion KRW and 23.6 trillion KRW, respectively. Additionally, the bank recorded monthly profits since July last year and achieved its first quarterly profit in Q3.
Toss Bank will select Hong's successor through the ENC. After candidate recommendations and board approval, the final decision will be made at the shareholders' meeting at the end of March. With little time left until the shareholders' meeting, the board's decision is expected to proceed swiftly. The ENC consists of three members, including CEO Hong and outside director Park Se-jun (Senior Advisor at the law firm Hwawoo). Hong is expected not to participate in this ENC activity. If he resigns from the ENC, one of the outside directors will become a member. Otherwise, he may only exercise voting rights within the ENC.
According to Toss Bank's articles of association, the ENC selects and manages CEO candidates. As of the end of 2022, four candidates were on the Toss Bank CEO candidate list, including three internal personnel and one from the financial sector. The ENC may also receive candidate recommendations from shareholders, stakeholders, and external advisory institutions.
The next CEO must achieve the "two rabbits" of growth and risk management, represented by annual profitability and maintaining soundness. Toss Bank, which has never achieved annual profitability since its launch, views this year as a critical opportunity. The bank also needs to manage deteriorating soundness indicators. The representative soundness indicator, the non-performing loan ratio (NPL - the ratio of loans overdue by more than three months to total bank loans), is rising. As of Q3 last year, this ratio was 1.27%, up 1.04 percentage points from 0.23% in the same period the previous year.
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