"Second Half Strategy? Feeling Lost"… Banks Shrink Amid COVID Impact and Rising Risks

Significant Reduction in Second Half Management Strategy Meeting
Focus on Risk Management and Digital Innovation

[Asia Economy Reporters Kim Hyo-jin and Kim Min-young] Major commercial banks have become cautious ahead of establishing their management strategies for the second half of this year. Due to the impact of the novel coronavirus infection (COVID-19), the management strategy meetings, which were usually prepared with grand ceremonies every year, have been significantly scaled down this year.

Rather than drawing aggressive blueprints for new businesses, banks are focusing on preparing risk defense measures accumulated through 'COVID loans' and other factors.

According to the banking sector on the 3rd, Shinhan Bank plans to replace the second half management strategy meeting with a non-face-to-face video conference at its headquarters on the 17th. On-site attendance has been minimized to department heads and some executives at the headquarters. Shinhan Bank usually held management strategy meetings at the Gyeonggi Giheung training center with around 1,000 employees gathered.

Woori Bank will also hold its management strategy meeting on the same day in the auditorium at its headquarters. Unlike previous years when it was held at large venues such as KINTEX in Goyang, Gyeonggi Province, the event has been greatly scaled down. It is known that the number of attendees in the auditorium will also be limited to comply with COVID-19 prevention measures.

Hana Bank also plans to conduct management strategy meetings with a minimum number of people gathered by sales groups without any separate events. Depending on the spread of COVID-19, the meeting may be held in a non-face-to-face manner without people gathering on-site.

KB Kookmin Bank replaced the second half management strategy meeting with a simple 'assembly' style meeting attended only by some executives on the 1st. NH Nonghyup Bank also held a meeting only with department heads of the sales headquarters on the 26th of last month and moved on.

The primary reason is to prevent the spread of COVID-19, but banks explain that the worsening internal and external management and business conditions have also made it difficult to present bold and proactive strategies like in previous years or earlier this year.

A bank official said, "On the surface, various strategies can be proposed, but the biggest issue in the second half will undoubtedly be risk management," adding, "Because the public responsibility of COVID-19 financial support must be borne in the second half as well, the focus will be on smooth support and maintaining soundness."

Another bank official hinted, "If it were not for COVID-19, efforts would have been made to review and supplement major external business plans and statuses such as global business expansion established last year and earlier this year, but the progress of the business itself has become physically difficult, so the direction is understood to have shifted significantly."

This official said, "It is urgent to reorganize the loan portfolio for the second half based on a thorough review of loan assets accumulated in the first half," adding, "Except for livelihood financial support related to COVID-19, other loan sectors will inevitably shift toward a somewhat conservative direction overall."

Meanwhile, banks are putting effort into various innovations in management and work environments aligned with the non-face-to-face trend triggered by COVID-19. In the case of Woori Bank, detailed strategies were established based on four major strategies: digital transformation, building a non-face-to-face transaction environment, 'New Normal' management, and proactive risk management.

Other banks are also focusing on internal system innovation centered on non-face-to-face services, customer-centric service restructuring, expanding loss absorption capacity through loan loss provisions, active management of various soundness indicators, and adjusting profitability indicators to respond to ultra-low interest rates.

This content was produced with the assistance of AI translation services.