KB Looks
to Overseas
for Expansion

Still the largest bank in Korea, searches for entry into Vietnam, Indonesia

Kookmin Bank, the nation's largest commercial bank, celebrated the 5th anniversary of its merger with the Korea Housing Bank on November 1st.
"New Business, Positive Attitude, and Change in Idea Creation,"President & CEO Kang Chung-won stressed those challenging words at a ceremony for the 5th year anniversary of the merger.
President Kang said the first two years of his role as the top manager of the bank has been devoted to solidifying the foundation for the bank亮s further growth. But he added that the bank cannot afford to be satisfied with the results and relax because the banking environment is full of new challenges, warning of many new rougher challenges than what the bank has come through in the past 5 years would occur in the next five years.
"We have to try hard to come up with means to charge up the bank's operation, but at the same time, we are at the juncture to search for new area of business with positive attitude and new ways of thinking,"Kang stressed.
He has always been telling bank employees his management ideal that one has to be like a tiger to look at realities, but move cautiously like a bull, but full of energy in dealing with new challenges.
President Kang has been credited with managing the bank with over 200 trillion won in assets smoothly without trouble. Last year, the bank earned 2.2 trillion won in net profit for the first time joining the "2 trillion won"club. He has also been credited with winning the battle for acquisition of the Korea Exchange Bank over the Hana Financial Group headed by Chairman Kim Seung-yu, known as a wizard for M&As. During President Kang's short-tenure, the bank has been able to improve its services enough to get out of the cellar it has been put into in the area of services.
But it seems he has a rough road ahead. First of all, he has to untie the knot of extending the agreement with Lone Star over the purchase of the KEB, which expired on October 16th. Nothing has been done so far with Lone Star mired in the investigation on suspected irregularities involving Lone Star's purchase of a majority stake in KEB. Prosecutor's Office appears to have come to the conclusion that Lone Star bought the stake in the KEB far cheaper than market price and want to investigate the U.S. investment fund's top officials. Kookmin Bank has not been able to do anything yet in renewing its agreement with Lone Star, although it's been over a month since the agreement expired.
President Kang, with the tenure of his office with only a year left to go, has been looking overseas to find new businesses for the bank. In September, the bank signed a strategic alliance agreement with the Chinese Industry and Commerce Bank, to prepare for exports of its financial techniques. He also is looking for chances to forge M&As with banks in Southeast Asia, especially, in Vietnam and Indonesia through the bank's task force team.
But the most pressing task for Kang is to finalize its deal concerning the KEB and then have Kookmin prepared to compete with world rivals with advanced financial systems. As he said in his anniversary speech, the bank has to be a top bank in the country first and go on to compete with global banks and be a first-class global financial institution.
The acquisition of the KEB is part of KB's strategy to build its capacity to compete with world rival financial institutions on its way to globalize its operation and position itself as a representative bank in the world.
The bank's Q3 net profit amounted to 878.1 billion won bringing its net profits in the three quarters in the year to 2.258,1 trillion won. The ROA amounted to 1.6 percent and ROE 21.83 percent with BIS coming to 15.01 percent, good enough to show that KB is still the top bank in the country.
KB officials said interest earnings slid a little (1.1 percent from the previous quarter) with the NIM margin narrowing, but savings in expenses by about 10.6 percent from the previous quarter helped to boost the net income. Continuous effort to keep assets sound have paid off with the loan loss provision cut by 55.7 percent from the same period last year. Non performance loan ratio reached 1.33 percent and delinquent loan ratio at 1.28 percent down 0.37 percent and 0.42 percent respectively from the same period last year. nw

President & CEO Kang Chung-won