NH Bank erased the deficit it incurred in 2015 and hit the comeback trail, netting 110 billion won in net profit last year, due mostly to cuts and the successful collection of defaulted loans from the borrowers, financial authorities said Jan. 9.
They said the bank posted 170 billion won in net profit in the fourth quarter, to bring the total net profit for the second half of 2016 to around 440 billion won. That was enough to wipe off the deficits the bank suffered in the first half of last year and still come out in the green for the whole year, financial sources said.
The bank incurred a huge loss provision amounting to 1.3 trillion won, because it had loans out to a number of big companies in such sectors as shipbuilding. That sector is in the middle of restructuring to improve its operations. The bank, as a result, ended the first half 329 billion won in the red.
Chairman Kim Yong-hwan declared an emergency operation period for NH Bank and even called on Korea Development Bank and the Export and Import Bank of Korea to continue funding to SXT Shipbuilding, which was going through restructuring last year so that the company would come out ahead.
All of the bank’s staff also continued to be on alert, watching for outstanding loans defaulting. They visited borrowers directly, pleading for their best effort to keep the loans healthy. The special efforts began to pay off in the third quarter, showing profit rising to 267.2 billion won, with net profit in October alone coming to 120 billion won.
KB Financial Group’s share price outstripped its rival Shinhan Financial Group in January for the first time in four years. KB Financial’s shares jumped 2.66 percent as of the close on Jan. 25 to 46,300 won per share, an astounding rise of 56.2 percent from 29,650 won per share one year earlier.
The reason behind the rapid rise of KB Financial’s shares has been the projection that its earnings for 2016 would beat analyst estimates, amounting to some 2.293 trillion won, making it the first time the group surpassed the 2 trillion won level, closing the difference in net profit to 337.4 billion won from as much as 718.9 billion won in 2015 with Shinhan Financial Group, the leader among the financial groups in Korea.
KB Financial Group has been able to boost its profits through M&As. The group took over the LIG non-life insurance firm in 2015 and Hyundai Securities last year, boosting the non-banking earnings of the group to around 40 percent and bringing down the banking sector profit share to around 60 percent of the group’s total earnings.
Aspiring to becoming “Asia Top 10, Global Top 50” under the vision “global financial group leading the Asian financial industry,” KB Financial Group has launched a step-by-step strategy to meet the goal. Through 2017, the group will continue to consolidate the basis for becoming a global leader of finance by securing a distinctive competitive edge, and recover its leadership in the domestic financial market by 2020 with profit expansion through stable asset growth and improved portfolios.
KB Financial Group provides services related to corporate governance, corporate information and IR via its website in real time, and strives to open up important information on corporate management through the Financial Supervisory Service and Korea Exchange. Six committees execute checks and balances on executive management and non-executive directors.
They are the audit committee; risk management committee; evaluation and compensation committee; non-executive director nominating committee; audit committee member nominating committee; and the corporate governance committee.
KB Financial Group is improving management transparency with the non-executive director evaluation system, executing education on general services to strengthen substantial monitoring capability to the company, and strengthening the advisory function of management’s long-term vision and strategy. KB Financial Group promises to protect shareholders' rights. KB Financial Group reflects minority shareholders’ intentions through a cumulative voting system in writing. “We will strengthen our competitiveness to regain Kookmin Bank’s reputation as the leading bank and lay out a platform for sustainable growth of non-banking business, accordingly setting forth a solid turning point to reclaim Group’s stature as the leading financial group,” the group says.
To turn challenges into opportunities, the group in 2016 was focused on its mid- to long-term strategy of “securing distinctive competitive advantages” in general and improving its ability to generate income.