Kookmin to shutter 55 of its branchesKookmin Bank, Korea’s largest lender by assets, said it will close 55 branches in January as the country’s lenders struggle with the lowest lending margins in four years.
The closures will cut costs and help the Seoul-based bank, a unit of KB Financial Group, better serve Korean customers who are using Internet banking more frequently, Kookmin Bank said in an e-mailed statement today. Employees at the shuttered branches will be moved to other outlets, the lender said, without providing an estimate for cost savings.
Kookmin Bank, which has 1,205 branches across Korea, joins Standard Chartered and Citigroup in trimming outlets in the country as profits decline and lending margins narrow amid central bank interest-rate cuts to stimulate economic growth.
“Smaller branch networks will be a trend for Korean banks,” Yoo Sang-ho, an analyst at HI Investment and Securities, said by phone yesterday. “To protect earnings, it’s inevitable for banks to tighten their belts to reduce costs when it’s hard to boost top-line revenue.”
KB Financial shares rose 0.8 percent to 40,000 won ($37) in Seoul yesterday. The benchmark Kospi index fell 0.7 percent yesterday.
Combined net income at 18 lenders in the nation dropped to 1.8 trillion won in the third quarter from 2.4 trillion won a year earlier, according to Financial Supervisory Service data. The average net interest margin stood at 1.81 percent, the narrowest level since the second quarter of 2009, the data show.
Standard Chartered, the U.K. bank that makes three-quarters of earnings in Asia, said Nov. 11 it plans to trim about 25 percent of its Korean branches as it cuts back in less profitable markets. The number of branches at Citigroup’s Korean lending unit dropped to 196 as of September from 218 at the end of 2012, according to the bank’s regulatory filings. Bloomberg