By Choi Kyong-ae
Banks will tighten up their sales networks in the second half as record low rates squeeze their margins further and competition gets tougher, bank officials said Wednesday.
KB Financial Group and Hana Financial Group look most aggressive in catching up with Shinhan Financial Group whose flagship union Shinhan Bank topped 17 other banks last year, posting 1.46 trillion won in net profit.
The country's 18 commercial banks include six provincial banks, such as Daegu Bank and Busan Bank, and two state-run banks such as Korea Development Bank and Export-Import Bank of Korea.
In a workshop held over the weekend, KB Financial Group Chairman Yoon Jong-kyoo and executives from KB Financial and its flagship KB Kookmin Bank drew up a business plan for the second half of the year.
"In the workshop, Chairman Yoon asked each outlet to play as an independent business entity to analyze the market and attract customers with differentiated services," a KB Financial spokesman said.
KB Kookmin Bank posted a net profit of 1.03 trillion won for the whole of 2014. The outcome looked pale before Shinhan Bank's net profit of 1.46 trillion won. That's because the former ran 1,048 outlets and 20,675 workers as of June 30, outnumbering Shinhan's 898 outlets and 14,500 employees,
"We will reorganize our outlets to focus on sales operations by shutting down money-losing outlets and opening new ones," the KB spokesman said.
Hana Bank and Korea Exchange Bank (KEB), two flagship units of Hana Financial, will focus on launching a merged bank which will include the names Hana and KEB on Sept. 1 with combined assets of 290 trillion won.
The merged bank is planning to strengthen its sales activities with combined sales networks to offset recent poor earnings in KEB. KEB posted 376 billion won in net profit last year, down 15 percent from 444 billion won a year earlier.
In February 2012, when Hana Financial acquired a controlling stake in KEB from U.S. Lone Star Funds, Hana Financial, KEB and its union agreed to complete the integration between Hana Bank and KEB by February 2017. So the union protested against the earlier-than-planned merger, saying it could result in massive job cuts.
Shinhan Bank executives will hold a meeting on Monday to discuss measures to cement its leading status in terms of profitability. It plans to strengthen the retail and corporate banking services while exploring new markets away from declining rates.
Korea's benchmark interest rate stands at an all-time low of 1.5 percent.
Other banks such as National Agricultural Cooperative Federation are expected to draw up business plans for the rest of the year seeking profitability.