[Promissory Note Initiative]③Hana: "Assets Safely Managed, Returns Exceptionally Delivered"

Interview with Dongshik Kim, Executive Vice President of Hana Securities
Targeting the Promissory Note Market with a Focus on 'Stability'
"Half for Corporate Investment... Supporting the Entire Business Life Cycle"

"Hana Securities' promissory notes are supported by a multi-layered defense structure, which includes liquidity management based on a high credit rating, the company's proprietary funds, and the backing of Hana Financial Group. Another key strength is the ability to offer stable interest rates."

Dongshik Kim, Head of Corporate Strategy Division, Hana Securities. Hana Securities

Dongshik Kim, Head of Corporate Strategy Division (Executive Director) at Hana Securities, stated this in a recent interview with The Asia Business Daily, adding, "There is synergy and brand power that comes from being under the large umbrella of Hana Financial Group."

He explained the overall strategy for the promissory note business, repeatedly emphasizing 'stability' and 'sustainability.' Kim highlighted, "Although we are a latecomer, our goal is to become a trusted promissory note issuer in the long term, rather than chasing short-term popularity."

Hana Securities received approval for its promissory note business last month and launched 'Hana THE Promissory Note' this month. Immediately after the launch, demand surged, and the flexible and contracted volume of 300 billion won prepared for the product was sold out within a week.

Kim explained, "There was more pent-up demand than expected, and we are witnessing a full-scale shift of funds from bank deposits to securities firm products."

Legally, Hana Securities can issue up to twice its equity capital (about 6 trillion won). However, the company stresses that establishing a firm presence in the market is more important than rapid scaling up. This year's target for outstanding promissory notes is set at between 2 trillion and 3 trillion won.

He said, "Rather than expanding rapidly, it is important to achieve a stable market entry in the first year," and predicted, "In the second and third years, we will gradually expand, and in the mid-to-long term, we expect to reach a level equivalent to our equity capital."

He also made it clear that the company would refrain from actions that disrupt the market through excessive interest rate competition. He explained, "The Promissory Note Management Committee, along with executives in charge of products, sales, and risk, holds multiple meetings to determine the interest rate," adding, "We will only offer rates that can be stably returned to customers, taking into account our operating profit."

The direction for managing the funds raised is also clearly defined. Hana Securities plans to maintain about half of the funds raised through promissory notes as highly liquid assets to ensure redemption stability, while investing the remainder in corporate finance assets. Starting this year, the company plans to supply more than 25% of the funds raised through promissory notes as venture capital.

Kim emphasized, "We will move away from the past structure of excessive concentration in real estate project financing (PF) and build a portfolio that channels funds to small and venture businesses, as well as innovative companies."

He continued, "For early-stage startups, we will provide equity investments, and for growth-stage companies, we will support them through mezzanine investments such as convertible bonds (CB), thereby supporting the entire corporate lifecycle and serving as a partner through to IPO. This is the number one principle in managing Hana Securities' promissory notes."

Regarding concerns about managing maturity mismatches between short-term funding and mid-to-long-term asset management in the promissory note business, Kim stressed the importance of systematic internal management principles. He explained, "The maturity of promissory note investors ranges from flexible to up to one year, with an average of about six months. On the asset side, there are investments with recovery periods of over three years, so an average maturity gap of about 2.5 years can occur."

However, he added, "We plan to constantly monitor so that this maturity gap does not widen excessively and to flexibly adjust the funding structure and asset portfolio. Continuously managing the maturity structure of assets and liabilities is the core of the promissory note business."

He went on to say, "Hana Financial Group has industry-leading risk management policies and internal control standards. As operations are conducted under the group's strict management system, concerns about liquidity risk are limited."

Kim described the promissory note approval as "the fourth engine for Hana Securities." With the addition of promissory notes as a stable funding source to the existing three pillars of wealth management (WM), corporate finance (IB), and investment & trading (S&T), he explained that the company's overall business competitiveness can take a significant leap forward.

He said, "All 1,800 employees have been eagerly awaiting this approval. Especially at sales sites nationwide, whether or not we have promissory note products makes a significant difference in our competitiveness with clients."

Finally, he emphasized, "Promissory notes offer returns one step higher than bank deposits while remaining easily accessible to everyone. Hana Securities' role is to create a virtuous cycle where the valuable funds safely gathered from the public become a wave that flows back into Korea's innovative companies."