Chairman Kim Yong-hwan of NH Financial Group. (Photo: NH Financial Group)

NH Financial Group has put itself on emergency footing amid the sluggish performances of the shipbuilding and shipping industries.

Chairman Kim Yong-hwan held  a meeting with CEOs of the group’s affiliates to discuss a strategy for the second half of the year on July 12 at the group’s head office in Seodaemun, Seoul. He said the group should work to overcome the crisis to strengthen its growth base for the future by declaring an emergency for its management.

Under the emergency management strategy, the chairman said the group should work on reducing expenses, taking preemptive measures to prevent defaults on loans provided to its customers and merge or close 50 of its branches.

“What should be done will be done without due regard to the National Agricultural Cooperatives Federation’s ongoing moves to strengthen its organization and manpower management,” the chairman said.

He went on to say that the management centered on jobsites will be further strengthened. Management will reexamine the one-stop support system for affiliates to make sure the jobsites with very good results will be given huge honors, while ones that did not meet the targeted results will be punished.

Because financial transactions are increasingly being done on mobile devices, NongHyup Financial plans to reduce its non-profitable outlets outside Seoul and Gyeonggi Province, he said. NH Bank had 1,175 outlets as of the end of July.

He wants a strategy to truly differentiate the group from its rivals, and one that is specialized enough to improve the group’s operation. He noted that NH Financial has the best foundation for the creation of synergy in its distribution and finance. In drawing up the strategy, he means to take advantage of the nationwide branch network of NACF, and the regional agricultural and livestock businesses to the fullest.

The chairman also brought up the performance results of the group in the first half in which 270 billion won was invested in a gas power plant in the U.S. and took over the Yeungdungpo Time Square Office, which are among the best results in the first half operation.

NongHyup Financial posted a 427 billion won ($367 million) net profit in January-June, down 19 percent from 525 billion won from a year earlier, according to the company.

NongHyup Financial Group is considering acquiring banks in Indonesia or Myanmar as it seeks to expand into global markets amid low growth and low margins in Korea.

"We plan to invest in banks or leasing companies in emerging markets, and we are considering acquiring them to increase our presence there," a group official said Monday.

He confirmed a statement by NongHyup Financial Chairman and Chief Executive Kim Yong-hwan in a recent interview with Yonhap News Agency.

The former chief of the Export-Import Bank of Korea said that providing financial services to Korean companies operating in local markets and Koreans living there was not enough to make big profits.

To push forward its investment plans, NongHyup Financial said it had set up a task force composed of CEOs from NH Bank, NH Investment & Securities and NongHyup Life Insurance.

"The team is conducting a feasibility study on Asia's potential markets such as Myanmar, Indonesia, Vietnam, China and Cambodia before NongHyup Financial enters the markets," the official said.

On top of stake purchases, acquisition of a bank or other financial firms would facilitate NongHyup Financial's bid to gain a foothold in those emerging markets, he said.

NongHyup Financial does not have a history of investing in an international financial company, let alone buying one.

Meanwhile, Chairman Kim will strengthen NongHyup's partnership with its parent National Agricultural Cooperative Federation (NACF).

"The NACF has been in talks for a month to sign an initial pact with Hualian in China to provide agricultural products to the major Chinese retail group," an NACF spokesman said. "It also plans to supply agricultural goods to local distributers in Qatar and Dubai later this year."

The NACF reportedly signed a deal to provide food worth 1 trillion won to Hualian for the next three years. But it did not confirm the figure.

"When the NACF makes business ties with companies in China and other developing countries, we will be able to support the NACF with financing services and diversify our business portfolio," Chairman Kim said.