Huge Momentum for Growth

Hana Financial Group counts on takeover of Korea Exchange Bank to spur its operations at home and overseas


Chairman Kim Seung-yu of Hana Financial Group,
who engineered the takeover of Korea Exchange Bank,
now awaiting for the approval from the
Financial Services Commission.

Hana Financial Group expects this year to be a spectacular one for its operations as it continues to push its plan for boosting its position to rank among the top 50 financial groups in the world by 2015.
The group plans to take advantage of its asset management business and retirement fund management, which have been growing and breaking all kinds of records, to create synergy with its other financial business sectors to secure a long-term growth engine.
The group looks to expand its overseas operation through Korea Exchange Bank, which it will take over soon, utilizing KEB's vast overseas banking network.
Last year, the group's net profit exceeded 1 trillion won for the first time in three years, despite a poor financial business environment all over the world, rejoining the 1-trillion-won-in-net-profit club. Its total assets increased 26 trillion won to 196 trillion won with the help of its key affiliates such as Hana Bank and Hana Credit Card. The net profit represented an increase of 230 percent YoY.
The net interest margin (NIM) during the last quarter of last year climbed to 2.24 percent by rising 0.14 percent from the preceding quarter, while the amount of non-performing assets fell 0.16 percent to 0.54 percent, helping Hana Bank increase its profits.
For the group, though, its major task is to boost its ranking to be counted among the top 50 financial groups in the world by 2015, and to do that, the group has been working on finding means to improve its financial services through a close network with corporate customers both at home and overseas to collect varied financial information useful in its exploration of new financial service areas.
The group has also been trying to improve its profit-making structure under a mid-to-long term plan to advance it to the levels of those in advanced countries and localize its overseas operations so that it would grow to be a global financial group with a strong base in Asia.
The group aims to boost its net profit to 1.2 trillion won this year, up 20 percent from last year, and total assets to rise by 10 percent, with this year being the initial year of its five-year vision.
Officials of the group are confident about achieving the targets, counting on interest rates to climb and the appreciation of the Korean won to stabilize consumer prices, which will further improve NIM, raising the profitability of banks.
They are also counting on the projection that the stock market will continue to rise, favoring the sale of stock-type funds, rises in demand for financial products, the expansion of the wrap market and changes in sales conditions for variable insurance policy products to lead the improvement of performance results for the group at the end of this year.
A key factor of the group's strategy is the takeover of KEB, which is awaiting the Financial Service Commission's approval, expected to come this month. The takeover is vital to its plan as it creates synergy with other affiliates. It will also increase the group's total assets to 311 trillion won from 196 trillion won as of the end of 2010. KEB's loans and deposits rank the third largest among banks in the country and KEB also will help Hana Bank in such banking areas as private banking, foreign exchange and trade finance, among others, strengthening their position among rival banks.
The merged banks would also come close to catching up with Kookmin Bank the leader in such areas as home loans, bancassurance sales, corporate lending, investment banking and fund sales. The number of branches will rise to 1,004 to rank second after Kookmin Bank and become a leader in the number of branches and other banking operations overseas with KEB having 73 overseas branches, wholly owned subsidiaries and representative offices.
The group would also strengthen its management of retirement funds and asset management services backed up by its increased capital as well as its overseas operations.
Analysts at securities firms feel that the group's market value would be expanded with the takeover of KEB, no longer undervalued because of smaller assets and low profitability, although it ranked fourth largest among banks in the country. The merger would boost its ranking to third largest due to rises in assets and profitability. nw

Photo on courtesy of Hana Financial Group.