[비즈월드] Until the 5th, 2020 report cards of the 4 major financial groups, excluding Nonghyup Financial Group, were released among the 5 major financial groups in Korea.
The most eye-catching thing is that KB Financial Group surpassed Shinhan Financial Group and regained its leading financial throne in three years.
The consolidated net income of KB Financial Group last year was 3,4552 billion won. This is 46.4 billion won more than Shinhan Financial Group’s 3,4146 billion won, and it has regained the title of the throne that it gave to Shinhan Financial in 2018 and 2019.
In the competition between banks, which are key affiliates of the two companies, KB Kookmin Bank stood out against Shinhan Bank. Both Kookmin Bank and Shinhan Bank saw their net profit declined compared to 2019, but Shinhan Bank’s decline rate was cut.
Kookmin Bank’s net income for the year was 2,2982 trillion won, a 5.8% decrease from the previous year, and Shinhan Bank was 277 trillion won, a 10.8% decrease from the previous year.
Looking at the fourth quarter of last year alone, KB Finance outperformed Shinhan Finance. Both companies, including one-off costs, declined, but Shinhan Financial’s decline was higher.
Shinhan Financial Group’s net profit in the fourth quarter was 4644 billion won, a 59.4% decrease from the previous quarter’s 1,144.7 billion won, due to one-off expenses arising from the loss of investment products such as lime.
However, KB Financial Group’s net profit in the fourth quarter was 577 billion won, which was only 50.5% lower than the previous quarter’s 1.16 trillion won due to the corona 19 provision.
In particular, the distress of competition for leading finance positions of the two companies is attributed to the fact that last year’s private equity crisis such as Lime and the securities sector showed a big difference among non-banking sectors. The loss of one-off expenses in Shinhan Investment Corp., where Lime Fund sales were large, caught up.
Shinhan Investment Corp.’s net income for the year was 154.8 billion won, a decrease of 29.9% (-66.1 billion won) compared to the previous year, and KB Securities achieved a net profit of 4256 billion won, an increase of 65% (+167.7 billion won) compared to the previous year. KB Securities explained that the increase in stock trading value and efforts to increase customer entrustment customers played a part.
The industry predicted that the difference in net profit last year was less than 50 billion won, and this year too, the gap in net profit will be narrow due to fierce competition between the two companies. Each year, the difference in net profit between the two companies was determined within 100 billion won. As a result, there is an analysis that financial companies that focus on expanding profitability and managing risks are likely to take the lead.
Among these, Hana Financial Group received envy from other financial companies by announcing that its annual consolidated net income increased by 10.3% (245.7 billion won) to 2,637.2 billion won last year, and that it achieved record-high performance.
Hana Financial Group said, “This net income is due to preemptive provisions for the aftermath of Corona 19, private equity funds, and one-off expenses due to special retirement, but the group’s efforts to reduce costs and advancement in the non-banking sector, portfolio and sales, This is the result of channel diversification, etc.”
Last year, the proportion of non-banking profits recorded 34.3%, an increase of 10.3 percentage points over the previous year. Hana Financial Investment was KRW 4109 billion (+46.6% compared to the previous year), Hana Capital KRW 1772 billion (+64.5% compared to the previous year), and Hana Card KRW 154.5 billion (+174.4% compared to the previous year).
When the group’s core income of interest income of KRW 5.814.3 billion and commission income of KRW 2.255.7 billion are combined, it achieved KRW 870 trillion, an increase of 1.8% (145.4 billion KRW) from the previous year.
In the fourth quarter, the transfer amount including provisions for bad debts and accumulated bad debts last year, including the accumulation of 2769 billion won, was 8473 billion won. This seems to have sufficiently secured the buffer capacity of the group.
The provision for bad debts related to Corona 19 was KRW 337.7 billion per year, and preemptive expenses related to private equity funds were accumulated at KRW 2207 billion.
Despite the special retirement, the group’s sales and management expenses decreased by 4.6% (189.4 billion won) from the previous year through efforts to reduce the overall cost of the group.
The group’s net interest margin (NIM) for the fourth quarter was 1.54%, and as of the end of last year, the group’s total assets including trust assets of 133 trillion won were 593 trillion won.
Looking at the performance of major affiliates, Hana Bank’s annual consolidated net income in 2020 was 2.1 trillion won, down 6.1% (129.7 billion won) from the previous year. It was analyzed that even in efficient cost reduction, it was due to the low interest rate and unfavorable business environment caused by Corona 19.
The bank’s core profit, interest income (5,3078 billion won) and commission income (711.3 billion won), decreased by 4.5% (281.3 billion won) from the previous year to 6,191 billion won.
As of the end of last year, Hana Bank’s total assets including trust assets of 71 trillion won were 462 trillion won.
Hana Financial Investment achieved a net profit of 4109 billion won, up 46.6% (1306 billion won) year-on-year, as its overall profit-generating ability such as securities brokerage, acquisition arrangements, and advisory fees improved in a favorable environment with a sharp increase in stock market trading volume.
Hana Card and Hana Life Insurance’s net income increased by 174.4% (982 billion won) to 155.4 billion won, respectively, and 12.3% (2.9 billion won) to 26.6 billion won, respectively.
The board of directors of Hana Financial Group decided that the dividend per share was 1350 won (1850 won including intermediate dividends, 20% dividend payout ratio), taking into account the economic downturn due to the prolonged corona19 crisis, market uncertainty, and the financial authorities’ dividend payout recommendations. Dividend per share is the result of a 16% decrease compared to 2019.
Woori Financial Group had to be satisfied with the disclosure that in its last announcement, net profit in 2020 recorded 1.3 trillion won, down 30.2% from the previous year.
Last year, we successfully completed mergers and acquisitions (M&As) such as capital and savings banks, and this year’s performance “Turnaround (Turnaround)” in this year’s performance, by maintaining solid fundamentals such as improving asset quality despite difficulties arising from the novel coronavirus infection (Corona 19) and proactive preparation for future uncertainties. Turnaround)’, the group explained.
Net operating income, combined with interest income and non-interest income, was approximately KRW 6.8 trillion, maintaining the level of the previous year. It seems that the same level of operating profit was maintained as of the previous year despite the two cuts in the Bank of Korea’s base rate by improving the profit structure, such as asset growth centered on corporate loans and an increase in low-cost core deposits.
In addition, the soundness sector has improved further thanks to the performance of a risk-oriented business culture that has been continuously promoted for the past three years. The NPL rate and the delinquency rate recorded 0.42% and 0.27%, respectively, showing a further improvement compared to the end of the previous year. The excellent asset ratio and the NPL coverage ratio also showed 87.5% and 151.9%, respectively, and the ability to absorb future losses was strengthened.
The group emphasized that it has preemptively accumulated bad debt provisions in preparation for the prolonged Corona 19 based on improvement in soundness, and that private equity-related expenses were sufficiently reflected in advance to eliminate uncertainty in the future.
After the transition to a holding company, the M&A effect of newly incorporated subsidiaries intensifies and the proportion of non-bank profits gradually increases, while Woori Financial Capital, which has an annual profit of close to KRW 100 billion, is expected to expand further in the future.
An official of Woori Financial Group said, “Last year was a year to prepare for the future with solid growth, improving soundness, and preemptively accumulating expenses. This year, earnings turnaround that was realized through profitability recovery and active cost management through strengthening sales power Of course, it will be a year to secure the momentum for mid- to long-term development based on the group governance structure that has been solidified in the third year of the landlord conversion.”
He added, “We will be preparing for the post-corona era by declaring this year’s core strategy of’digital innovation’ and proclaiming it as the’first year of ESG management’ to solidify the foundation for sustainability management.”
Meanwhile, when looking at the performance by major subsidiaries, Woori Bank consolidated net income was KRW 1.363.2 billion, Woori Card recorded 12 billion KRW, and Woori Financial Group recorded 62.9 billion KRW.