Financial Holding Savings Banks Expanding Mid-Interest Rates Under Their Brand, Q1 Performance Soars (Comprehensive)

Hana Savings Bank, Net Profit Up 174.9%
Profit Improves Alongside Mid-Interest Loan Boom
Commercial Banks Also Engage in 'Cross-Selling' with Savings Banks

[Asia Economy Reporter Song Seung-seop] The first-quarter performance of savings banks affiliated with financial holding companies has significantly improved. This is due to their focused targeting of middle- and high-interest financial consumers, a segment that commercial banks have not been able to capture, supported by the expansion of the mid-interest rate market. It is evaluated that the savings banks, which were reluctantly acquired during the 2011 insolvency crisis, have started to become profit drivers.

According to the five major financial holding companies (KB, Shinhan, Hana, Woori, NH Nonghyup) on the 17th, the first-quarter net profit of their affiliated savings banks was 27.6 billion KRW. KB Savings Bank and NH Savings Bank each earned 6.4 billion KRW, the highest amounts, while Shinhan and Hana Savings Banks recorded 5.4 billion KRW and 5.2 billion KRW respectively. Woori Financial Savings Bank, incorporated in March, posted a net profit of 4.2 billion KRW.

The increase in net profit this time was steeper than last year. The largest growth was seen at Hana Savings Bank, which surged 174.9% (3.3 billion KRW) from 1.9 billion KRW in the first quarter of last year. During the same period, KB and NH Savings Banks grew by 88.2% and 23.0%, from 3.4 billion KRW and 5.2 billion KRW respectively. The only institution with a decrease in net profit was Shinhan Savings Bank, which fell 13.7% from 5.4 billion KRW.

Asset size also grew rapidly. KB Savings Bank’s assets increased by 680.8 billion KRW (48.5%) over one year, reporting total assets of 2.0842 trillion KRW. Shinhan and NH Savings Banks grew by 28.9% (459 billion KRW) and 26.6% (373.8 billion KRW), reaching 2.0459 trillion KRW and 1.7772 trillion KRW respectively.

This contrasts sharply with just a few years ago when they struggled to avoid losses. The majority view in the industry is that financial holding company-affiliated savings banks were reluctantly acquired to overcome the 2011 insolvency crisis. They were considered burdensome as they were tied up with non-performing loans and unable to generate profits.

Increasing Mid-Interest Loans and Revamping Mobile Platforms... Becoming Profit Drivers

Market analysis suggests that the expansion of mid-interest loans has secured a stable source of income. Savings banks successfully penetrated the niche left by commercial banks, which find it difficult to lend to financially vulnerable groups at high interest rates. Shin Hong-seop, CEO of KB Savings Bank who secured a third term, focused on strengthening digital finance in the mid-to-long term and acquiring new financial consumers. Oh Hwa-kyung, CEO of Hana Savings Bank since 2018, saw performance soar thanks to a portfolio centered on household loans.

Woori Financial, which became a wholly owned subsidiary of Woori Financial Group through Ajou Savings Bank, recovered performance through loan expansion, asset management, and increased lease fees from capital. With the savings banks’ performance reflected for the first time this quarter, the holding company’s non-bank sector profits also surpassed 100 billion KRW for the first time.

Operations through proprietary mobile applications and group affiliates’ mobile platforms are also expanding. KB Savings Bank’s newly launched ‘Kiwi Bank’ last year is widely credited with increasing both loans and interest income. In particular, to secure young customers with high mobile usage, features such as facial recognition authentication, Dutch pay, and group account functions were added. Woori Financial Savings Bank also resolved a 100 billion KRW capital increase plan on the 11th to expand its mid-interest loan portfolio and strengthen digital capabilities.

There is also a view that the financial holding companies’ ‘support strategy’ played a role. This is because ‘cross-selling’ is possible, linking those who cannot get loans at commercial bank counters to savings banks. An industry insider said, "Financial holding company-affiliated savings banks have the strength of cross-selling together with commercial banks," adding, "The trust and stability that large brand names provide to consumers likely influenced the strong performance."

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