Hana chairman unveils global push
Hana Financial Group will “compete shoulder to shoulder with leading global financial companies,” Kim said on Friday, stressing the need for mergers and acquisitions, particularly in the nonbanking sector.
Although he offered no further details, he said the group is currently pursuing the acquisition of a capital company in Indonesia, which has a huge market for automotive purchases, and is investigating the Vietnamese market.
He also said the financial group is considering expanding to North America through a joint venture with Chinese private banks.
“In the past, our customers have been mostly Koreans or Korean immigrants in overseas markets,” the chairman said. “Such a situation is limiting, and we plan on expanding our foreign customer base to locals as well as Chinese immigrants.”
However, Kim said the financial group’s focus in on M&As of nonbanking institutions since regulations make it difficult to acquire banks, as shown by the breakup and sale of Woori Financial Group.
Hana Financial Group’s initiative is relatively bold compared to other competitors who decided to shift their focus to the local market this year and faced one of the biggest challenges in recent memory.
Leading banking groups like KB Kookmin, Shinhan and Hana as well as foreign banks suffered substantial losses last year as the central bank kept its monetary policy loose.
“What we were most concerned about recently was whether the central bank was going to further lower the key borrowing rate,” said a high-ranking official in the banking industry.
Net profit of Hana Financial Group in 2013, according to estimates by FnGuide, a financial information provider, was 29 percent less than 2012 at 1.2 trillion won ($1.1 billion).
KB Financial Group’s net profit is estimated to have dropped 23 percent to 1.3 trillion won. Shinhan Financial Group is believed to have seen the smallest drop of 8 percent to 2.3 trillion won, while Woori Financial Group is likely to post the largest decline in its net profit of 55 percent to 780 billion won.
A Financial Supervisory Service report also showed that since the start of the global financial crisis in 2008, the profitability of the four major Korean financial groups has been falling.
As of the third quarter of 2013, the net interest margin of Hana, Shinhan, KB and Woori was 2.1 percent, compared to 2.3 percent when the global crisis emerged.
Especially with the local financial industry expected to show moderate annual growth of about 4 percent by 2020, Hana Financial Group stressed the need to develop new sources of profit from outside the country.
Kim emphasized that Hana Financial Group’s global ambition is possible largely because of the worldwide network established by its main banking affiliate, Korea Exchange Bank.
Hana Group currently has the largest global network among local banking groups with 127 branches in 24 countries.
“Our vision will be achieved once we have more than 300 overseas operations,” Kim said.
As part of its global vision, the financial group expects to be Asia’s fifth-largest financial group and 40th largest in the world by 2025. The group’s earnings from outside Korea in 2012 were 237 billion won, and the goal is to increase that to 2 trillion won annually.
The financial group also expects its nonbanking business to account for 30 percent of its total revenue by 2025.
BY LEE HO-JEONG [firstname.lastname@example.org]