Savings Banks Record Historic Performance... SBI Solidifies Lead in 1st Place (Comprehensive)

SBI Savings Bank, Industry's First to Surpass 11 Trillion in Assets
Intense Competition Expected as Gap Narrows in Battle for 3rd Place
Top 5 Savings Banks' Market Share Continues to Rise

[Asia Economy Reporter Song Seung-seop] In the savings bank industry, which posted record-breaking performance, SBI Savings Bank, ranked first in asset size, appears to be establishing a dominant position. It is interpreted that the gap with other companies has rapidly widened by realizing economies of scale. Meanwhile, the gap between the 3rd to 5th places has narrowed further, and competition for the top ranks is expected to intensify.

According to the industry on the 2nd, SBI Savings Bank's assets last year amounted to KRW 11.2552 trillion, an increase of KRW 2.5676 trillion (29.55%) from KRW 8.6876 trillion the previous year. This is the first time SBI Savings Bank has surpassed KRW 11 trillion in assets. During the same period, net income also increased by 37.24% to KRW 258.3 billion, and deposits rose by 23.16% to KRW 8.7857 trillion.

According to the '2020 Savings Bank Business Performance' data disclosed by the Financial Supervisory Service, the industry saw rapid growth in assets and equity capital last year. Corporate loans rose 16.1% (KRW 6 trillion) to KRW 43.2 trillion, and household loans increased 21.1% (KRW 5.5 trillion) to about KRW 31.6 trillion. Net income reached KRW 1.4054 trillion, an increase of KRW 127.5 billion from the same period last year.

Amid the overall boom in the industry and record-high performance, SBI Savings Bank also cleared KRW 700 billion in deficit that had not been liquidated for eight years. Its holding company, SBI Holdings, incurred a massive amount of deficit due to contingent liabilities during the acquisition of Hyundai Swiss Savings Bank in 2013. Through aggressive management strategies, the deficit was reduced to KRW 15 billion by the third quarter of last year and was fully cleared in the books last year. The deficit item on the financial statements was converted to retained earnings, recording KRW 49.2 billion.

SBI Savings Bank is solidifying its dominant position by widening the gap even within the Big 5 (SBI, OK, Korea Investment, Pepper, Welcome). With assets of KRW 9.0162 trillion, it is KRW 2.239 trillion ahead of OK Savings Bank, the industry's second largest. Considering the gap was KRW 1.3958 trillion a year ago, it has nearly doubled.

It is analyzed that the strategy of significantly increasing mid-interest loans was effective. At the end of last year, SBI Savings Bank's household credit loan balance was KRW 4.5332 trillion. More than 60-70% of this was mid-interest loans (16%), indicating a significant expansion of related product lines, according to an industry insider. As a result, interest income expanded by KRW 195.2 billion (24.74%) to KRW 984 billion. Although the profit margin is lower than the existing high-interest products exceeding 20%, it attracted many borrowers, realizing economies of scale.

Many Customers Attracted via App... Fierce Battle for 3rd Place

A significant number of customers come from the proprietary mobile application (app) launched in June 2019. A representative from SBI Savings Bank explained, "There are 700,000 sign-ups through the mobile platform, with deposits amounting to about KRW 2.2 trillion," adding, "Since last year, there has been an increase in young customers who are difficult to classify as existing customers."

The 3rd place was taken by Korea Investment Savings Bank, which recorded asset growth of 33.55% (KRW 1.1449 trillion) year-on-year, reaching KRW 4.5666 trillion in assets. Korea Savings Bank, which was pushed down to 4th place for the first time since 2016 due to Pepper Savings Bank entering 3rd place in the second quarter, reclaimed and maintained its position by surpassing KRW 4 trillion in assets in just one quarter.

Competition for the 3rd place in the industry is expected to become even fiercer. The gap is narrowing due to the rapid growth of 4th place Pepper Savings Bank and 5th place Welcome Savings Bank.

Pepper Savings Bank's assets last year were KRW 4.3198 trillion, and Welcome Savings Bank's were KRW 4.2798 trillion. The difference between 3rd and 4th place is KRW 236.8 billion, and between 4th and 5th place is only KRW 40 billion. In particular, Pepper Savings Bank's net income increased by 161.65% year-on-year, far exceeding the industry average of 9.97%, and its assets grew by 30.23%. Welcome Savings Bank had the highest growth rates among the top five banks, with assets and deposits increasing by 39.43% and 29.46%, respectively.

However, looking at the entire sector, the share of the top five savings banks has increased further. This is because loan demand concentrated on savings banks due to the low-interest rate environment and the COVID-19 pandemic was mostly centered on the top companies. The assets of the five companies totaled KRW 33.4276 trillion, accounting for 36.33% of the industry's total assets of KRW 91.986 trillion, as provisionally disclosed by the Financial Supervisory Service. This is an increase of 2.93 percentage points from 33.40% last year. Net income was KRW 634.2 billion, with its share rising from 37.12% to 45.12%, nearly half of the total.

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