Chairman Han Dong-woo of Shinhan Financial Group won the Dasan Grand Financial Award for Shinhan Bank’s outstanding performance in 2014.
The bank, a major affiliate of the financial group under the management of President Suh Jin-won, has not yielded its top position in net profit among banks. Its ROA — 0.74 percent — is double the industry average, with a default rate coming in the lowest in the industry, at 0.44 percent. Suh took over the management of the bank in December 2012 and earned a lot of praise for the bank’s excellent performance last year.
The excellent results appear to be better than what they really are, since they can be partly contributed to fintech, or lending to SMEs with special technologies at lower interest rates.
The superior results also have been attainable due to the steady push of the bank’s management strategy to control risk, as enunciated by Suh during his New Year’s address in January 2014. He called for soundness of the bank’s operation in all areas with preemptive risk analysis and three-dimensional monitoring of risks to cope better when troubles arise. What he meant to do was to minimize the loan loss provision by screening the risks on loans to prevent defaults.
The bank, however, kept lending to SMEs despite risks by launching the TCB loans to SMEs with excellent technologies from July last year. Until November 2013, the bank dished out some 1.27 trillion won in technology-related loans to SMEs, the most in the banking industry, in the five months since July. In 2014, the bank unleashed some 4.9 trillion won more than in the previous year
Overseas operations also played a big role in creating profit for the banks while the domestic banking environment suffered due to low interest rates. Last year, the bank’s profit from overseas operations came to over $100 million for the first time. This year, Shinhan Financial Group aims to secure around 10 percent of its total profit from overseas.
Shinhan Bank had enormous success from its operations in Vietnam, so much so that it has become an outstanding example for Korean banks overseas to follow in the mode of “financial hallyu.” Hallyu refers to Korean culture becoming popular overseas.
The bank’s only wholly-owned local subsidiary in Vietnam, Shinhan Vietnam, has 10 branches across the country. It raked in some $35 million in profit last year, which was second only to HSBC among some 55 foreign banks doing business in the S.E. Asian nation.
Shinhan Bank picked as its next growth engines the retirement fund market and internet banking. The bank already introduced its retirement financial product brand, “Shinhan Future Plan,” to be run by the Future Plan Center with the participation of some of its affiliates.
Other affiliates of Shinhan Financial Group joined the bank at the center to come up with financial products based on retirement stages.
The group also launched its Cyber Financial Center as a preemptive move to lead the market whose trends have been changing fast with internet banking leading the charge.
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