Woori Leads, KB and Shinhan Commit the Most: The Calculus Behind Productive Finance [1mm Finance Talk]

Five Major Financial Groups Align with Lee Jaemyung Administration’s “Productive Finance” Policy
Announce Plans to Invest a Total of 508 Trillion Won
Distinct Strategies from Each of the Five Groups

Lee Eokwon, Chairman of the Financial Services Commission (sixth from the left), and the heads of financial holding companies attended the "Chairman of the Financial Services Commission-Financial Holding Companies Meeting" held on September 15 at the Bankers Hall in Jung-gu, Seoul, and are taking a commemorative photo.

The five major financial groups-KB, Shinhan, Hana, Woori, and NH Nonghyup-will invest a total of 508 trillion won in productive and inclusive finance by 2030. With the Lee Jaemyung administration placing an emphasis on productive finance, the five major financial holding companies have moved quickly to align themselves with this new policy direction. Woori Financial Group was the first to respond to the new administration’s agenda, while KB Financial Group and Shinhan Financial Group declared their intention to make the largest investments.

On September 29, Woori Financial Group announced plans to allocate 73 trillion won to productive finance and 7 trillion won to inclusive finance, totaling 80 trillion won. This was the earliest announcement among the five major financial holding companies. Notably, Woori Financial Group Chairman Lim Jongryong personally led the briefing, taking a prominent role. Within the financial sector, there is a perception that Chairman Lim, who is seeking another term, has made a strong impression on the new administration.

About two weeks after Woori’s announcement, on October 16, Hana Financial Group revealed plans to invest 100 trillion won-84 trillion won in productive finance and 16 trillion won in inclusive finance. This amount is 20 trillion won more than Woori’s commitment. Although Chairman Ham Youngjoo of Hana Financial Group succeeded in securing another term earlier this year, legal risks still remain for the group.

NH Nonghyup Financial Group joined the productive finance initiative on November 4, neither too early nor too late. Through the “NH Mutual Growth Project,” the group plans to supply a total of 108 trillion won-93 trillion won for productive finance and 15 trillion won for inclusive finance. While NH Nonghyup Financial Group ranks fifth in net income among the five holding companies, its timing and investment amount are both considered to be in the middle range.

KB Financial Group and Shinhan Financial Group, which are competing for the leading bank position, both announced on November 9 that they would each provide 110 trillion won for productive and inclusive finance. As the last to announce, their investment amounts were the largest among the five groups. Although it was speculated that KB Financial Group, with the largest assets and net income, would make the biggest investment, it matched Shinhan’s amount. As of the third quarter, KB Financial Group and Shinhan Financial Group have asset sizes of approximately 796 trillion won and 783 trillion won, respectively. KB Financial Group plans to allocate 93 trillion won to productive finance and 17 trillion won to inclusive finance.

Within Shinhan Financial Group, there was a strong internal opinion that execution is more important than simply declaring large figures. However, under pressure from financial authorities and following a series of “declarations” by other financial holding companies, Shinhan ultimately announced the largest amount. In fact, Shinhan’s recent investment announcement in productive finance highlighted its focus on execution by specifying support policies that have already been implemented, such as for the semiconductor cluster and the metropolitan express railway (CTX). Jin Okdong, Chairman of Shinhan Financial Group, who is preparing for another term, has demonstrated a proactive stance on productive finance-for example, at the “National Growth Fund Public Briefing” presided over by President Lee Jaemyung in September, he directly declared the group’s intention to move away from real estate-centered banking practices.

Whenever a new administration takes office, financial holding companies have reluctantly presented generous commitments under various frameworks such as inclusive finance or mutually beneficial finance. Previously, under the Yoon Sukyeol administration, major commercial banks also contributed more than 4 trillion won under the banner of “mutually beneficial finance.” Due to the highly regulated nature of the financial industry, financial companies have little choice but to be attentive to the new administration’s preferences whenever there is a change in government.

However, there is a positive view regarding the current administration’s productive finance initiative. An official from one of the financial holding companies stated, “Unlike the simple levies imposed by previous administrations, this time there are opportunities for the financial holding companies to generate sufficient returns, through the National Growth Fund or their own group funds. While the outcome will depend on how these investments are managed in the future, at least the government’s plan is convincing.”

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