There were 304 bank branches that were closed last year. It accounts for 5% of all bank stores. More than 200 stores have disappeared from the four major banks: Kookmin, Shinhan, Hana, and Woori. This is the result of banks’ restructuring of offline organizations as the number of financial consumers visiting stores after the Corona 19 crisis and the’digital and non-face-to-face era’ open up. Kakao Bank, an internet-specialized bank without stores, rose to second place in the per capita productivity index at once.
○ Only 4 major banks have fewer stores by 236
According to data on the status of bank store operations released by the Financial Supervisory Service on the 7th, the number of commercial, special, and state-run bank stores (branches and branch offices) in Korea as of the end of last year was 6405, a decrease of 304 from a year ago. Compared to the decline in the number of stores in 2018 alone to 23 and 57 in 2019, the rate of decline is even faster. Only the four major banks eliminated 236 stores, which is about 7% of the number of stores (3525) as of the end of 2019. Kookmin Bank 83, Hana Bank 74, Woori Bank 58, and Shinhan Bank reduced 21 respectively.
In the first half of last year, when the Corona 19 crisis began, domestic banks cut 184 stores. Then, at the time, Financial Supervisory Commissioner Yoon Seok-heon said, “It is not desirable for banks to sharply reduce their stores in a short period of time,” and asked, “Please make sure that supervision is done. The decline in the second half of the year was slightly reduced to 120 according to the FSS chief’Umpo’, but the in-person sales organization did not stop shrinking. In February, the Financial Supervisory Service made it mandatory to conduct a preliminary impact assessment before closing to prevent banks from closing their stores at will, and ordered them to consider switching branch offices first.
As in the past, the bank argues that the need to maintain large stores on the first floor of downtown downtown is reduced, and consolidation of some stores is inevitable. With the development of non-face-to-face finance and the spread of Corona 19, customers are no longer looking for branches. The cost of a large bank to maintain a store in the downtown area of a large city ranges from 1.2 billion to 1.7 billion won a year. The bank explained that it was not easy to secure about 200 billion won in credit for each branch.
○ Lightweight carvin is more productive
With the spread of digital finance, improvement in productivity of specialized internet banks is drawing attention. Last year, Kakao Bank achieved a net profit of 1136 billion won, eight times that of 2019 (13.7 billion won). In terms of earnings before provision per capita, which is a representative productivity indicator of the bank, it recorded 234 million won, ranking second in the banking sector after Hana Bank (250 million won). It surpassed Shinhan Bank (229 million won), Kookmin Bank (280 million won), Nonghyup Bank (188 million won), and Woori Bank (153 million won).
Kakao Bank’s work efficiency has also been raised to a level similar to that of commercial banks. Kakao Bank’s operating income ratio (CIR) recorded 51.3% last year, on par with Hana Bank (46.1%) Shinhan Bank (47.1%) Kookmin Bank (53.6%) and Woori Bank (59.0%). CIR refers to the proportion of sales and management expenses in operating profit. Kakao Bank expects to reduce this share to 30% this year. Marketing spending is on the decline as sales are on track.
As non-face-to-face business spreads, it is predicted that the growth of internet-specialized banks, which are light in size, will stand out even more. An official from the financial sector said, “The reason why banking financial holding companies recommend Internet specialty banks to the supervisory authorities is because of the perception that they cannot keep up with Internet specialty banks in terms of cost and efficiency.”
Reporter Park Jin-woo [email protected]
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