An Enviable Profit Record

Kookmin Bank sees a 524.7 percent net profit increase

The board of directors of Kookmin Bank approved and ratified the non-consolidated financial statements prepared in accordance with Korean GAAP for fiscal year 2005. After the board of directors'meeting, the bank held an earnings conference and released its operating results.
Total assets at the end of last year amounted to 179.6 trillion won, the same as in the preceding year. Loans in local currency fell 3.3 percent at the end of last year totaling 118.6 trillion won, compared to 122.7 trillion won in 2004. Total liabilities stood at 167.2 trillion won last year, down 1.9 percent from 170.4 trillion won in the previous year. Won currency deposits, in the meantime, totaled 131.6 trillion won last year, up 1.9 percent from the preceding year. Total stockholders equity recorded 12.4 trillion won, up 34.8 percent compared to 9.2 trillion won in the preceding year.
Operating income totaled 3,015.6 billion won at the end of 2005, up 74.7 percent from the previous year, which recorded 1,726.3 billion won. Non-operating income totaled 212.4 billion won, compared to 1,096.3 billion won at the end of 2004. Net income amounted to 2,252.2 billion won at the end of 2005, up 524.7 percent from 960.5 billion won at the end of 2004.
NIS recorded 3.35 percent, NIM 3.36 percent, the return on assets 1.24 percent, and the return on equity 20.35 percent. Total loans for NPL management totaled 137,521.5 billion won up 0.9 percent from the same period in the previous year. Substandard and below loans amounted to 2,388 billion won last year, down 35 percent from the previous year. Allowances for loan losses amounted to 2,468.4 billion won in 2005, down 21.6 percent from the previous year. Coverage ratio recorded 105.6 percent in 2005, up 18 percent from the preceding year of 87.6 percent.
Delinquency ratio recorded 1.7 percent last year, compared to 2.67 percent in the preceding year.
Kookmin Bank has long been the undisputable leader in the commercial banking in Korea. Retaining from complacency about its position, the nation's largest lender is ready for a second take-off. President and CEO Kang Chung-won pledged to further improve its asset quality and strengthen profitability in order to solidify the top position in the country, he said in a recent interview with media. "Facing unprecedented challenges internally and externally, we will do our utmost in terms of profitability, the improvement of asset quality, and the development of new earnings sources in various fields,"he said in the interview.
Since he took the office in November, 2004, he has made all efforts to transform Kookmin into a whole new entity. To produce greater synergy, the first step he preceded was the integration of three separate labor unions, Kookmin Bank's, Housing & Commercial Bank's, and Kookmin Card's. On January 1, the merged bank's single labor union was launched after three years of disharmony. He made the decision of integration in only days after he took charge of the Kookmin Bank.
In his efforts to restructure the bank, Kang suggested the "win-win retirement program"in which the bank helps retiring bank employees find a new job. Many outgoing workers either found a job in the bank's subsidiaries or on in its subcontract companies. Some of them even started their own business with the help of the bank.
"Personal and system restructuring is producing results and our asset quality is a lot stronger than before,"the president declared. Boosted by dynamic decrease in provision cost against bad loans , Kookmin Bank displayed a strong retail capability with 890 billion won in net profit in the first half of last year, 269.6 percent higher than the previous year. "While maintaining our top position in the retail banking, we are also restructuring to complete against foreign banks operating in the country which mainly target high-income generators,"the CEO said.
The bank plans to develop new clients among small-and-medium-size enterprises (SMEs) with sound finances and strong growth potential. The lender has recently allowed its branches to lend SMEs up to 10 billion won from previous lending limit of 7 billion won.
Kookmin has 26 million customers base with 1,100 employees nationwide. It aims to become the second largest in terms of market capitalization in Korea behind Samsung Electronics. nw

Kookmin Bank President & CEO Kang Chung-won.