Han Young-joo, Chairman of Hana Financial Group, "Avoiding Expansion... Overcoming Crisis through 'Substance and Collaboration'"

Hamyungju, Chairman of Hana Financial Group Photo by Hana Financial Group

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Hana Financial Group, which has rapidly grown through aggressive mergers and acquisitions (M&A), celebrated its 20th anniversary this year. Amid challenging conditions surrounding the financial industry, such as high exchange rates and limitations on bank growth, Ham Young-joo, Chairman of Hana Financial Group, shared his New Year's message, stating, "We will avoid M&As that simply aim to increase size and instead overcome the crisis this year through 'solid fundamentals and collaboration.'"

In a written interview with Asia Economy on the 8th, Chairman Ham assessed the economic situation, saying, "This year, policy risks from Trump, domestic political risks, and other uncertainties are simultaneously emerging both domestically and internationally, and with a delayed recovery in domestic demand, growth is expected to be weak."

Exchange rate risk is also a factor making business prospects difficult this year. Chairman Ham said, "The previous resistance level in the mid-1400 won range has been breached, and the possibility of surpassing 1500 won cannot be ruled out," adding, "The recent sharp rise in the exchange rate appears to reflect a 'Korea discount,' and if political uncertainties are resolved in the future, the exchange rate is expected to fall back to around the 1400 won level."

Regarding the financial industry, Chairman Ham stated, "The growth potential of the financial sector has reached its limit, and uncertainties remain, so it is urgent to devise measures to improve productivity." He added, "Especially with the implementation of network separation policies and the anticipated introduction of external artificial intelligence (AI) models through innovative financial services, productivity enhancement and financial service innovation through AI will accelerate."

Chairman Ham identified 'solid fundamentals and collaboration' as this year's management strategy to overcome challenges. He pointed out, "As asset size growth and portfolio expansion have been achieved, it is necessary to objectively review whether our fundamentals and capabilities have grown accordingly," emphasizing, "Based on solid fundamentals, we must establish a stable business foundation and promote various collaborations within and outside the group, including financial and non-financial sectors, to provide new value to our customers."

This year, as the era of significant interest rate cuts begins and a decline in net interest margin (NIM), a key profitability indicator for banks, is inevitable, Hana Financial plans to focus on expanding its non-bank business sectors. Chairman Ham said, "The base rate cuts will lead to a decline in banks' NIM, limiting growth potential in the banking industry," and added, "Hana Financial will lead the market and strengthen its competitive edge in areas where it has strengths, such as wealth management (WM), investment banking (IB), and foreign exchange."

However, the group plans to avoid M&As solely for the purpose of increasing size. Chairman Ham stated, "Hana Financial has a history of successfully growing into a comprehensive financial group through M&As, but going forward, we will selectively review only those M&A deals that can enhance competitiveness in terms of increasing shareholder and customer value."

Chairman Ham also reiterated the importance of the smooth implementation of the value-up plan. He said, "Last October, we announced a 'corporate value enhancement plan' to continue shareholder returns based on solid fundamentals," adding, "To ensure smooth implementation, we will improve the business portfolio and management KPIs focusing on capital efficiency and business viability to achieve a return on equity (ROE) of over 10%."

Regarding internal controls, which shook the banking industry last year, Chairman Ham said, "Hana Financial has been conducting the 'Group Standard Internal Control System Establishment Project' for about four years, even before the revision of the Governance Act," and added, "This year marks the first full year of operation for the 'Group Common Internal Control System,' which will enable the leveling up of internal control standards."

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