Focus on Overseas Operation and Fee Income

Kookmin Bank aims to up total assets by 6% and expand overseas operation


President Min Byong-deok of Kookmin Bank

PPresident Min Byong-deok of Kookmin Bank said recently that the bank should increase its assets by 6 percent this year and net profit by more than 2.7 trillion won, the level the bank achieved before the financial crisis in 2007.
The CEO of the largest private bank in Korea told reporters on April 11 that the bank had a bad year due to the payment of honorary severance payments and a larger loss provision allocation and that this year he will see to it that the bank recovers its health.
Seeing that the bank’s total assets were 255 trillion won last year, a 6 percent increase would come to 15 trillion won, which the president forecast based on the projection that nominal economic growth would come to 9 percent with inflation at 3 percent, thus leaving 6 percent for the nominal economic growth rate. Min feels that the bank’s asset growth should match the nominal economic growth rate of 6 percent.
But Min stressed that real growth is what he truly has in mind rather than expanding the asset base. He said he will try to reduce risky loans and spare costs to increase net profit. He will also see that the bank tries to expand its fee income such as from foreign exchange deals and other non-interest income in light of intensifying competition among banks with the impending Hana Bank takeover of Korea Exchange Bank. He feels that KB should focus on the non-interest income sector to expand its net profit.
Min also told reporters the bank would participate in investment banking activities abroad in joint efforts with foreign banks. Since last year, the bank has been in talks with Sumitomo Bank of Japan on cooperation in overseas banking activities with details soon to be agreed upon as part of the bank’s effort to build an overseas banking network.
He also said the KB Financial Group hired 150 new employees this year for its overseas operations, including 30 who hold MBA degrees from such reputable schools as Stanford, MIT and the London School of Economics, and graduates of other famous universities around the world. About 120 of them will be assigned to the bank and the rest to affiliate Kookmin Card to handle asset management.
“At this moment, Kookmin Bank is standing at a crucial turning point as we continue to embrace change and innovation with the goal of building a brighter future for all of us. I can promise you firmly that I am absolutely committed to restoring KB’s competitiveness and enhancing the bank’s stability. With that in mind, I would like to discuss the key aspects management will be concentrating on as Kookmin Bank works to strengthen our position as the nation’s premier bank while setting the foundations to evolve into a global bank and Asia’s top financial institution,” Min said.
“Management’s first priority is, and will always be, maximizing customer value. As an employee of Kookmin Bank for close to three decades, I have experienced firsthand that the road to building a better, stronger bank starts with the nurturing of customer value.
“Which is why KB will adopt a more customer-centric approach that will bolster the quality of our products and services to meet each individual’s specific financial needs while fluidly remodeling our corporate structure and organizational polices in ways that best suit our customers.
“Second, Kookmin Bank is going to focus on cost-efficiency. To ensure that a virtuous cycle of ‘low cost, high efficiency’ can be maintained throughout the bank, we will concentrate heavily on increasing productivity, while adopting a slimmer structural model and enacting cost-cutting measures throughout the bank.
“Third, KB’s many branches will be the centerpieces of our business strategy. Kookmin Bank’s greatest strength has always been the employees’ sales skills, outstanding teamwork and unrelenting spirit. With the singular goal of increasing business, everyone at KB will work, both diligently and systematically, to equip our branches with the necessary sales capabilities that will result in enhanced productivity.
“Fourth, we will upgrade the bank’s risk management significantly by establishing an integrated management system through the development and execution of a bank-wide risk management strategy. Our early warning system will be better utilized as well in order to practice a proactive and preventive risk management style that accounts for expected loss and becomes less reliant on provisions such as allowance for bad debts.
“Fifth, Kookmin Bank will firmly establish a culture of meritocracy where all KB employees will be rewarded according to their performance and ability. I believe that this will lead to maximum productivity on all levels.
“Finally, we will give growth to a new corporate culture based on a can-do spirit that is unique to Kookmin Bank. ‘Innovation,’ ‘Challenge,’ and ‘Teamwork’ are the three components that will be the materials we use to build our new organizational culture, and it will be the executives and the senior employees that will be at the forefront, laying down the first bricks of innovation. We will coordinate diverse campaigns to promote reform throughout the organization, fostering a culture of cooperation and teamwork, with employees who are eager to embrace new challenges,” Min concluded. nw

Photos on courtesy of Kookmin Bank