Continuous
Support for SMEs

IBK President Kang pledges no reduction of loans to small companies

President Kang Kwon-seok of the Industrial Bank of Korea(IBK) said the IBK will not reduce its loans for SMEs this year, despite the move by commercial banks to do so, adding that banks should not always adjust their operations according to economic trends, but help create economic trends.
He said the bank will increase its loans by 10 trillion won this year to help out small and medium companies, stressing that the bank will be an umbrella when it rains. The IBK chief said he is determined to make the IBK to play a professional bank for SMEs by expanding the loan amount to the same level of increase made last year, although commercial banks have been trying to reduce their loans for this year in line with the Bank of Korea's move to reduce total amounts of loans made by banks and raise the level of reserve deposits.
"The IBK will provide 70 trillion won in loans to SMEs this year, 10 trillion won more than that last year, which will help the bank increase its market share of the SME loan market to 20 percent.
The IBK has introduced its new corporate identity mark for the first time in 24 years this year and the action came following its achievement of boosting its total assets to 100 trillion won with 1 trillion won in net profit last year.
CEO Kang said he should have left the landmark event to the next CEO, but he went ahead with it, thinking that the matter was too important and should have been carried out regardless of who the CEO happens to be. He said his tenure has only several months to go. He explained that the bank was able to clear 1 trillion won in net profit last year easily because it had already a large loan provision even before the Financial Supervisory Commission strengthened the loan provision levels for banks last year.
Regarding the criticism that banks make too much profit, Kang said banks should increase their capital so that they can make more loans, which helps the national economy to grow. "It shouldn't be a matter of concern to people,"he stressed.
One factor that draws much attention is the fact that banks made large profit last year, although the net interest margin grew smaller, he said. It is wrong to criticize banks to have made much profit from interest rates, even though competition was intense and NIM was small. The problem for IBK is its non-interest income takes up only 10 percent of total income and the bank, therefore, should diversify its income portfolio to expand non-interest income, which in turn, enables IBK to put out more loans to SMEs.
He said the IBK should strive to become an integrated financial service bank by adding insurance and securities to its operations, which is the matter for its survival, not an optional one. He IBK CEO stressed that the bank should be prepared to provide comprehensive services to top managers of SMEs, its core customers, in the face of the merger of the financial market in the country with the passage of the Integrated Financial Law. The IBK needs insurance and securities businesses to be able to survive from competition, which shows why the bank tried to take over LIG Insurance last year.
He said the bid price was unacceptable to the LIG in the way of explaining why the bid failed. But he said the bank will continue to try to add insurance and securities to its banking operation in the future.
CEO Kang also expressed an interest in big deals in the financial community. The IBK had all the intention to take over either LIG and Korea Exchange Bank. The bank can easily come up with 1.5 trillion won in funds to take over other financial institutions depending on approval by the FSC and in consortium with other large financial institutions; the bank could even take over bigger financial institutions.
He said IBK has opted to accept KORIBOR as its standard interest rate because it has best reflected market rates without much change, although many others have yet to follow. But he said he is sure that once the standard interest rate indicator is accepted by many financial institutions in the country, it would become the standard interest rate indicator for the financial market. The IBK has begun to market the IBK KORIBOR deposit from January 4, whose interest rate changes in every three-month period. The IBK plans to upgrade its rep office in Ho Chi Minh City to a business facility this year and set up two additional branches in China and put them under a regional head office to operate banking service to local companies. Of the 70 outlets to be set up this year, 30 of them will be facilities to service individual customers. nw

President Kang Kwon-seok of the Industrial Bank of Korea(IBK) Officials and staff wave IBK's new CI flag at the ceremony for declaration of the bank's new corporate identity Jan. 5