IBK Looks Forward to Next Half Century

With new vision to secure 15 mln customers and 300 tln won in assets as the bank celebrates 50 years of operation

The Industrial Bank of Korea, in a ceremony on Aug. 1 to mark its 50th anniversary, announced its new vision to expand total assets to 300 trillion won by 2015, securing 15 million individual and 1 million corporate customers.
At the ceremony held at its headquarters building in Euljiro, downtown Seoul, President Cho Joon-hee announced the vision as the initial step toward the bank's next half century of operation under the slogan of 100 Years of IBK, the Future of Finance. The new vision also calls for securing 15 million individual customers in addition to 1 million corporate customers by building a banking network in East Asia, a financial belt for IBK, with the development of new financial products for SMEs and various services.
Cho said in his congratulatory speech before some 400 officers and staff of the bank that IBK, which started as a small seedling half a century ago, has now grown to be a giant tree with deep roots taking charge of a corner of the national economy. He said every one of the bank's 11,000 officers and staff's sweat and tears have made IBK synonymous with hopes and dreams, breaking down academic and status walls, providing opportunities and possibilities to anyone.
He called on every employee of the bank to build a bridge to cross the river and build roads if faced with a mountain, and through such efforts they will overcome any problems and continue to march and the future will be IBK's.
When IBK was launched in 1961, its capital amounted to only 200 million won and assets totaled 2.9 billion won. They have since expanded to 10.4 trillion won in capital and 183 trillion won in assets. The number of branches has expanded to 645 from 31 and the number of employees grew from 935 to 11,000.
During the ceremony, awards were presented to exemplary businessmen under the IBK Corporate Hall of Fame to Chairman Kwon Hoe-hyun of Daehan Solution Co. and Chairman Chung Hong-ki of Oyoung Industrial Co. The IBK president said in presenting the awards that IBK will continue to help the business firms grow in every possible way in order to see many of them enter the IBK Corporate Hall of Fame in the days to come.
The Industrial Bank of Korea will focus its management on providing better services to its existing customers this year in order to reduce the number of customers changing banks, the bank said in its management plan for 2011.
The bank will concentrate on the development of new star products and provide full support to its employees with record reimbursements when they set excellent performance records.
The bank will also try to boost the health of its loans so that the effort will be settled in its corporate culture. The bank will also exert its full efforts to expand its overseas operations this year to find new growth engines. The bank will be fair in competing with rival banks and just in its relationship with customers.
The bank posted 1.29 trillion won in net profit for 2010, up 81.6 percent YoY, including 242 billion won in net profit in the last quarter of 2010. The 2010 net profit is the first time that the bank posted more than 1 trillion won in net profit since its 2007 net profit of 1.16 trillion won.
The bank attributed the large net profit to increased net interest margin in 2010 and a large increase in loans, along with an effective management of its expenses. The interest income alone reached 4.355 trillion won last year, up 22.3 percent YoY, with total loans rising to 119.5 trillion won including 9.3 trillion won loaned to SMEs. NIM rose 33 basis points to 2.77 percent.
Non-interest income came to 487.4 billion won, up 373.8 percent YoY, due to large increases in fee income. Total outstanding loans to SMEs stood at 93 trillion won, 20.7 percent of total loans provided to SMEs by all financial institutions in Korea. Household loans rose 3.8 trillion won, or 18.9 percent YoY, to 24 trillion won.
ROA hit 0.79 percent and ROE was 12.92 percent with a BIS of 12.51 percent, rising by 60 basis points.
Established under the Industrial Bank of Korea (IBK) Act in 1961, the bank shares a special relationship with the Korean government. The bank's primary objective is to promote independent economic activities of small and medium-sized enterprises (SMEs) and to enhance their economic position in the Korean economy. Due to this public policy role, the government retains full control over the bank including the appointment of management and the approval of budgetary and operation plans.
On Dec. 11, 2003, an amendment was made to the IBK Act, giving the bank more autonomy in its operations. Among other activities, the bank was allowed to invest in the equities and debt securities of the SMEs and to set up budgeting requirements for general and administrative expenses besides labor costs. An additional amendment was made to the Articles of Incorporation of the Act on March 30, 2005, granting the bank the ability to utilize more diverse sources of capital. nw

President Cho Joon-hee of the Industrial Bank of Korea.

Photo on Courtesy of Industrial Bank of Korea