[DGB Analysis]②Clear Expansion Trend in the Seoul Metropolitan Area, Non-Yeongnam Infrastructure Remains a Challenge

Capital Region Goddess Growth Rate Ranks 1st Among Regional Banks
Only Non-Yeongnam Area Branch Network in Daejeon Outside Capital Region
As a Competitor to Commercial Banks, 'Not So Sure'

Daegu Bank is showing rapid growth in the Seoul metropolitan area, but there are concerns that its infrastructure outside the non-Yeongnam regions is severely lacking, meaning it will take a long time to enhance its competitiveness as a nationwide bank.

According to the financial sector on the 12th, Daegu Bank's loan market share in the Seoul metropolitan area as of the end of March this year was 16.3% (8.1999 trillion KRW). This figure has increased by more than 2 percentage points annually from 5.9% in 2018 to 8.1% in 2019 → 10.9% in 2020 → 13.1% in 2021 → 15.8% in 2022.

The growth rate is the highest among regional banks. Over the past five years, Daegu Bank's loan growth rate in the metropolitan area was 279.9%, surpassing Busan·Gyeongnam Bank's 202.8%. Although Jeonbuk·Gwangju Bank had a higher loan share in the metropolitan area at 28.2% (as of the end of December last year), its growth rate was stagnant at 23.23%.

Daegu Bank's deposit scale in the metropolitan area is also increasing. The deposit share in the metropolitan area was 9.2583 trillion KRW (15.7%) as of the end of March this year, slightly down from 11.9438 trillion KRW (20%) at the end of last year, but it steadily rose from 6.2451 trillion KRW in 2018 → 7.6425 trillion KRW in 2019 → 8.0692 trillion KRW in 2020 → 11.9438 trillion KRW in 2021.

The secret to Daegu Bank's loan and deposit growth in the metropolitan area lies in differentiated metropolitan sales strategies such as the introduction of the corporate finance sales expert (PRM) system. Although the number of branches in the metropolitan area (Seoul·Gyeonggi·Incheon) is not large at eight, sales veterans with experience as branch managers at commercial banks directly visit corporate clients outside branches through ‘outbound sales’ to target niche markets in metropolitan corporate finance. PRM loan amounts increased nearly eightfold from 335.2 billion KRW in 2019, when the system was first introduced, to 2.4785 trillion KRW as of the end of March this year.

Daegu Bank plans to target the Gangwon and Chungcheong regions, where there are currently no regional banks, using the outbound sales method even after transitioning to a commercial bank, but there are many skeptical views. This is because Daegu Bank’s business base outside the metropolitan area and non-Yeongnam regions is weak. The only non-Yeongnam region outside the metropolitan area where Daegu Bank currently has a branch is Daejeon (opened in 2019). This is due to regional bank regulations that prohibit branches outside their main business areas and special/metropolitan cities. In contrast, the four major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) have 143 branches in the Gangwon and Chungcheong regions alone (as of the first quarter of this year). Even if Daegu Bank expands its network nationwide, it will inevitably take a long time to catch up with existing commercial banks in the short term.

A banking industry official said, “In the Chungcheong region, Hana Bank, which acquired Chungcheong Bank in the past, has overwhelmingly high influence, and in Gangwon, the lack of a manufacturing base means loan demand is not high,” adding, “Since Daegu Bank is smaller compared to commercial banks, it is not expected to have a significant impact or influence in the short term.”

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