Creating Synergy among Affiliates

Woori Financial Group going all-out to increase profit this year

The Woori Financial Group has been exerting its efforts on creating synergy among its affiliates now that Woori Bank is back on the right track and generating profits again.
Chairman Hwang Young-ki attended the Korea Investment Forum April 2-3 and pledged to expand the group's international operation at the IR round organized by Woori Securities with the support of the government.
The chairman's move was taken as a signal that the Woori group will go all-out to create synergy among its affiliates.
Woori Bank generated a net income of 1.42 trillion won less than 1.99 trillion won recorded in 2004, the largest in its history, but the group's overall profit came to only 1.2 trillion won last year(2004), showing that the earnings of other affiliate firms need to be increased to boost the group's income.
The group's synergy strategy is two-fold: First, it plans to merge similar business areas among its affiliates to reduce expenses and the second one is to boost earnings by taking advantage of the integrated business units.
The business supporting program is focused on streamlining systems. The group established the IT planning team to take charge of checking on expenses related to IT operation, and outsourcing under its plan and based on the plan, the group spun off the electronic system operation units under the Woori Financial Information System.
The group also set up the IT Project Investment Deliberation Council to strengthen the cooperation among its affiliates and carry on similar projects jointly. The group also launched the Risk Management Council to build a joint risk management system for its three banking affiliates to enable risk management on the group level. The financial holding group is also in the process of drawing up a joint standard plan to face the new BIS system, which will be made public soon. The group hopes to cut its expenses by half through the new integrated system.
The holding company also plans to combine its education and training facilities in operation by affiliates independently to save expenses. The move is based on the fact that the group saved some 11 billion won last year through joint purchase and logistics operation on the group level and this year they expect the cost savings will increase by several folds from last year.
The synergy strategy to support the business of affiliates is being put together in detail. The core of the strategy is to tighten the cooperative link between the banks and security firm under the group with the IB integration launched in April last year, showing good results already. It has already issued 300 billion won worth of ABS and is working on the issuance of $50 million in ship bonds together with Woori Bank and Woori Investment Securities.
The WFG has already introduced the Integrated Financial Center for the first time in the financial industry on March 16, which will function like a financial department store handling banking service, securities, insurance, credit card and consultation. The group plans to open two to three more of such centers around the country, depending on the success of the first center.
Work is in the progress to share information on clients among three banks, investment securities firm and asset management firm through the Corporate Information System already in operation. The information to be shared jointly will include those on companies with deteriorating financial conditions to upgrade the affiliates'competitive edge in the financial market.
Chairman Hwang Young-ki said the group plans to strengthen its non-banking sector, taking advantages that come with the financial group and grow to be a leading financial group in Asia.
The WFG has 10 affiliates including Woori Bank and Woori Investment Securities Co. and 11 subsidiaries of those affiliates such as Woori America. Its total assets stand at 164.5 trillion won and capital totals 7.4 trillion won.
Net profit of the group totaled 1.69 trillion won in 2005 and Woori Bank's net profit came to 1.42 trillion won. nw

Chairman of Woori Financial Group Hwang Young-ki