Kookmin Bank's Solid Strategy
Bank to keep its leading position across broad banking sectors amid rising competition

Kookmin Bank is the country's largest commercial bank with assets totaling more than 200 trillion won and over half of the nation's population 25 million as its customers.
Banking experts point out the size of capital, business network and profit prospect as the bank's strongest points, but people soon realize that's not all. The bank's share of retailing banking accounted for 32.7 percent at the end of last year, far ahead of the second highest bank with 12.2 percent. Furthermore, the bank secured 62 percent of the housing lottery deposit, 58 percent of the six largest commercial bank'sinstallment savings fund, and 44 percent of the 8 largest commercial banks bancassurance market. The bank was second in providing corporate loans, 3rd in syndication loans, and the world? first in futures transaction in won/dollar for two years in a row, among others.
In high-tech technologies, the bank won top place in Internet banking service, the first to introduce chip-base mobile banking, taking up more than half of the commercial banking market in the country, the first to build a satellite in-house broadcasting system and the first to introduce the electronic bank books to lead the development of the banking technology in the country.
Kookmin Bank announced that it aims to bring up its ROA to 1.2 percent, ROE 20 percent by 2007 and many banking experts expect the bank will achieve the target. The bank's first half profit came to 890 billion won, including 549.7 billion won in the second quarter. Officials of the bank explained that interest income gained 5.2 percent compared to the previous quarter due to increased interest margin and non-interest income also gained 5.1 percent, reducing the provision for loss by 62.6 percent.
Net interest margin (NIM) jumped to 3.4 percent in the second quarter from 3.26 percent in the first quarter, boosting interest earnings by 5.2 percent totaling 1.396,8 trillion won. Fee income fell 2 percent from the preceding quarter, but it actually increased 0.6 percent considering non-recurring income. Non-interest income rose 5.1 percent due to the fall in profit in bond transactions. Personnel expenses dropped 13.8 percent from the previous quarter due to completion of personnel restructuring including honorary retirement, while sales expenses and overhead expenses fell 1.2 percent. The ratio of non-performing assets dropped to 2.52 percent from the previous quarter. The BIS ratio rose by 1 percent to 12.25 percent.
The bank management focused on improving organizational matters of the bank in the first half to give satisfaction to its customers, but it will deal with the matters related to getting the bank closer to its customers. The bank will try to find management capacity to have its customers more satisfied in the face of the opening of the universal banking age, although marketing and financial results are evermore important.
First, the bank will try to improve its customer's service at all of its facilities including call centers, phone banking and the Internet banking.
Second, the bank will try to be equipped with the commodity management system to hike customer satisfaction levels from the shipment of commodities to after services.
Third, the bank will target at building the CRM system because knowing its customers well through the CRM system is prerequisite to customer-oriented retail banking business. Following the completion of the CRM system this year, the bank would be able to provide more personal service to its customers through the systematic marketing programs.
The competition among banks have been intensifying on attracting depositors, providing housing mortgage loans and group loans, but it appears all boils down to securing quality customers. The competition has grown worse with the foreign banks trying to secure larger share of the market against the large commercial banks raising concerns that NIM may be pulled down by the intense competition. The bank's strategy is to maintain its share of quality customers or increase the number. nw

Kookmin Bank President Kang Chung-won.