NH Financial Holdings celebrated its one-year anniversary on March 2 at a ceremony held on Feb. 28 at the NH Bank head office with officials and heads of other NH financial affiliates including NH Capital, NH Securities, NH Non-Life Insurance, and NH Bank led by NH Financial Holdings Chairman Shin Dong-kyu.

Since its spin off from the National Agricultural Cooperatives Federation (NACF) on March 2, 2012, NH Finance has now grown to seven affiliates including NH Bank, NH Securities, and NH Non-Life Insurance with total assets of 240 trillion won, becoming the fifth largest financial group in Korea in terms of assets.

From the time of its independence from NACF, NH Finance aimed at strengthening its competitive power by managing both the banking and non-banking sectors to grow together and is kick-starting its plans to expand its overseas operations to be an integrated financial group.

NH Finance reduced the size of its central operation system to beef up the operations of its local units.

But its initial year’ s operating results have not been enough to satisfy its goal. Chairman Shin, when he took office last June, claimed NH Finance would aim at securing 1 trillion won in profit during its initial year of operation.

However, net profit came to only 500 billion won °™ one half of the target °™ and even if the 430 billion won the company paid to NACF for the use of the NH brand name was added to that, profits still came short compared to those of its rivals including KB Financial and Woori Financial.

KB Financial’ s net profit amounted to 1.77 trillion won in 2012, Shinhan Financial’ s was 2.3 trillion won, Woori Financial’ s was 1.6 trillion won, and Hana Financial’ s was 1.6 trillion won.

Chairman Shin said this year is the year that the separation of the financial sector of NACF would have normal operations with all of its sectors working as expected. He said NH Finance’ s profit target for this year is 1.6 trillion won, triple the profit of last year. He said he will see that the capital of affiliates will be revamped this year by 610 billion won with the funds provided by the issuance of bonds amounting to 1 trillion won this year.

NH Finance launched its New York branch last year and opened its operational bases in such countries as Vietnam and China to spur its overseas advancement. Early this year the financial holding company slimmed its manpower at its head office to beef up personnel at business units in local regions.

But the financial holding company has a long way to go in its overseas operations because it spent much of last year working on its set up. This year it has to work on its operations both at home and overseas based on the strategy to find new growth engines and to make its operations diverse under segregated management. 

But many financial sources say that the financial sector of NH should first take care of its organizational culture to make itself a truly competitive financial business entity. It has to be a financial service organization rather than the supplier of policy loans by improving its customer services with a lowered posture as opposed to simply the provider of policy loans as dictated by the government.

It is likely to be another tough year for NH Financial with the economy likely to face a lot of problems including a slowdown in exports due to the depreciation of the Japanese yen, making Korean products more expensive than Japanese products in overseas markets. NH Financial has to boost the competitiveness of its financial products and maximize synergy between its affiliates to boost the productivity of their employees.