NH Bank, led by President Kim Ju-ha, netted 300.2 billion won in profit in the first half of this year, up some 179.9 billion won from the same period last year, far exceeding the bank’s 290 billion won profit target, the bank announced on July 17 during a management strategy meeting.
The bank came out ahead in its operation for the first time since 2008 when its performance results were hurt by defaults on guarantees for shipbuilding and investments in real estate due to the financial crisis that swept the world in that year, the bank said.
At the meeting, President Kim thanked all the officers and staff for their unceasing hard work to put the bank back on track despite the tough conditions facing the financial industry from the low-interest rates. He almost had tears in his eyes.
In a phone conversation with a reporter following the meeting, the CEO said he was so touched that the bank made a profit for the first time since 2008.
He had to make some tough calls for the bank to recover its operation, including hiring fewer college graduates, reductions in corporate deposits and encouraging branch managers to visit jobsites, which were necessary moves for the bank to make a profit again.
CEO Kim, who came to the bank last January, began experiments from that to make the bank profitable again. He reduced the number of college graduates to total fewer than 30 percent of the newly hired employees. He wanted to cut the losses from loans made to borrowers introduced by the college graduate employees as they get the commissions. He wanted to cut the commissions paid to them. The bank should work directly with new employees when it comes to issuing loans. Kim also let the branch managers make calls on corporate clients directly. Kim said he did not require them to meet the CEOs of the corporate customers, but to get the information they need from anyone — even guards — to find out what’s happening with them. Having branch managers visit corporate customers has had a good result so far in cutting the number of defaults by business firms, because the branch managers were aware of their operational conditions. The loss provision has been slashed some 246 billion won this year, showing the success of the Kim’s moves.
Kim has also been making moves related to reducing corporate deposits by 7 trillion won from last year, as they have been losing money for the bank. And at the same time, Kim took measures to increase loans, with loans outstanding as of May 31 coming to 155 trillion won, up only 0.6 percent since the end of last year, with the interest rate charged on loans staying around 1.5 percent. Many other banks expanded their loans despite the low interest rates.
Officials of the bank said they tried to slow the increases in loans due to the projected global economic slowdown set off by the Greek crisis, and the expected increase in the U.S. Federal Reserve key rate in the second half, and focus on cutting expenses. As a result, the bank saw its interest income rise to 2.685 trillion won in the first half, up 33.7 billion won year-on-year, which deserves comparison with those of the rival banks whose earnings from interest rates were falling.
The branch managers making the rounds to their clients have had the unexpected advantage of increasing retirement pension deposits.
As of Dec. 31, retirement fund deposits rose 430 billion won to 5.8 trillion won year year-on-year, boosting the non-interest income for the bank to 140.2 billion won, up 59.9 billion won year-on-year.
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