We are ready to take about 400 billion won in losses by expanding our loans to SMEs this year,” said President Cho Jun-hee of the Industrial Bank of Korea (IBK) at his New Year media briefing on Jan. 2.

Cho said the bank’s net profit projection for this year has been cut by 400 billion won from last year because the economy doesn’t look promising due to global economic conditions impacted by the European debt crisis, which is why IBK, a state-owned bank, will be at the forefront of providing financial support to SMEs. He added that he hopes the shareholders would understand.

IBK has already cut interest rates on loans to SMEs backed by mortgages by 0.5 percent and by as much as 2 percent on credit and real estate backed loans to SMEs. The interest rate cuts will reduce the bank’s revenue by around 200 billion won this year, Cho said. The bank is also projected to lose about 200 billion won on other supports that it will provide to SMEs this year.

“Taking away umbrellas when it is raining, the type of operations that banks practiced in the past, is gone,” Cho said, adding that IBK will show others that saving borrowers in need is the practice that banks should follow in order to stay alive in the days ahead.

From 2008 to 2010, a difficult economic period, IBK provided 17.6 trillion won in loans to SMEs, about 91 percent of all loans provided to SMEs by all Korean banks during the period, he said.

Through stringent risk management, IBK was able to post record net profit during the past two years and the bank will not reduce loans to SMEs this year, estimated at 36 trillion won. The bank is ready to increase loans if needed, Cho added.

The bank has already rewritten the double guarantor requirement on loans in such a way that a guarantor will only be held responsible for the loans that the guarantor pledged to guarantee, not the entire debt obligation of the borrower.

In order to carry out all the support IBK will provide to SMEs, the bank needs more deposits than anything else, Cho said, adding that the bank plans to raise its deposit accounts to total 100 trillion won this year, as the number of its customers exceeded more than 10 million last year.

The bank also will strive to increase its total assets to more than 200 trillion won this year. Last year, the bank’s deposit accounts amounted to 94.5 trillion won, with SME loans amounting to 98.6 trillion won and assets totaling 197 trillion won.

IBK will boost the number of its ATMs to 1,000 around the country by installing them in Korea Telecom phone booths under a contract sighed with the telephone company.

The bank will set aside 150 billion won every year for its support for the growth of cultural contents. The bank will also look for M&As of overseas banks this year to strengthen its overseas operations.