Bucking the down trend, some firms post growth
Jeonbuk Bank, a minnow of a bank based in North Jeolla, last year posted the best performance it has seen since its creation in 1969.
It earned 53.9 billion won ($39.3 million) in operating profit, and 41.8 billion won in net profit, a 32.8 percent and 65.2 percent growth from a year earlier, respectively.
Given the downward trend along the profit curve for major nationwide banks based in Seoul, the result may be a surprise to some.
Analysts, however, say the growth was expected. Part of the credit goes to efforts in developing an appealing product. The bank developed a sub-credit loan designed for the working classes of the city.
“We are very well aware of the needs of locals and their fiscal ability to pay back loans,” said Kim Cheon-sik, a vice head of the bank’s Seoul branch. “So, the chance of us giving out loans that easily become insolvent is very low.”
The falling interest rates that have been such a headache for other banks have actually been a blessing for Jeonbuk. According to Choi Jeong-wook, a researcher at Daishin Securities, the bank has a system in which the more interest rates fall, the more profit it makes. This is due to the fact the bank’s assets have longer maturity periods than its liabilities. Being faithful to a core business also worked to Jeonbuk’s advantage, analysts said.
Defying the trend, the bank did not issue risky high-yield derivatives such as subprime-related securities or currency hedge products like KIKOs.
LG Life Sciences, which took a different path from its rivals, was also forecast to have a better performance in the fourth quarter compared to the third. While other pharmaceutical companies were focused on selling existing drugs in the local market, the company created wealth in foreign markets.
“The number of countries it is exporting to are on the increase along with the number of items it is exporting,” said Jung Hyo-jin, a researcher at Hanwha Securities. “The dollars it earns from exports is also expected to grow.”
Hanwha Securities also named Orion, Handsome, Korea Zinc, Kia Motors and Tong Yang Securities as good picks for a strong fourth quarter.
By Cho Min-geun JoongAng Ilbo [joe@joongang.co.kr]
with the Korea JoongAng Daily
To write comments, please log in to one of the accounts.
Standards Board Policy (0/250자)