An image of BNK Busan Bank's retail branch / Courtesy of BNK Busan Bank

Regional banks are struggling due to a declining population, particularly in provincial areas where young people migrate to Seoul in search of employment and a higher quality of life.

According to the banking industry, the country's five regional lenders saw the number of retail branches falling from 660 in 2021 to 618 in 2022 and 611 in 2023.

The five lenders are BNK Busan Bank, BNK Kyongnam Bank, Jeonbuk Bank, Kwangju Bank and iM Bank.

Both affiliates of BNK Financial Group, BNK Busan Bank and BNK Kyongnam Bank are based in southeastern Korea.

Jeonbuk Bank and Kwangju Bank are based in the country's southwest. iM Bank, which was previously a Daegu-based local bank, rebranded from Daegu Bank after receiving government approval for nationwide operations this year.

BNK Busan Bank experienced a 5.6 percent year-on-year decline in earnings, reporting a net income of 251.4 billion won in the first six months of 2024.

Other banks also reported lower net incomes during the same period, with BNK Kyongnam Bank at 204.3 billion won, Kwangju Bank at 161.1 billion won, and Jeonbuk Bank at 112.7 billion won.

"The decline in the number of retail branches and profits for the five banks is closely tied to a shrinking population," an industry source said.

The source noted that Korea's population fell below 50 million in 2023, a figure it first exceeded in 2018.

The country's population is anticipated to undergo a steep fall and is projected to drop to 36 million by 2072.

The population decline has led some rural areas to face the risk of extinction.