Banks’ dividend payout ratio up

Local banks have increased their dividends payouts to shareholders while slashing jobs, prompting criticism from one lawmaker that banks are more concerned with profits than their social responsibilities.

Between 2009 and 2014, local banks paid out 17.7 trillion won ($15 billion) in dividends, 6.08 trillion of which came from the country’s top five financial holding companies like Standard Chartered Korea and NongHyup Financial Group, according to lawmaker Kim Ki-joon, who prepared the audit report based on figures from the Financial Supervisory Service.

The average dividend payout ratio at local banks during this period was around 37.1 percent. The ratio in 2014 was 43.9 percent, 10.5 percentage points higher than in 2013 (33.4 percent), and the highest since 2010, when it recorded 51.5 percent.

The ratio compares dividends to net income. In 2014 alone, 18 local banks gave out 2.64 trillion won in dividends while recording net profits of 6.02 trillion won.

Among banks, Standard Chartered Bank Korea, owned 100 percent by Standard Chartered Korea, had the highest dividend payout ratio, at 279.3 percent.

Despite seeing 55.2 billion won in operating losses last year, the bank paid out 150 billion won in dividends to Standard Chartered Korea, which is owned by U.K.-based Standard Chartered NEA Limited.

Standard Chartered Korea in turn paid out 500 billion won in dividends to its head office in the United Kingdom - nearly four times its net profit of 135.5 billion won that year, making its dividend payout ratio a whopping 369 percent.

Nonghyup’s dividend payout ratio ranked second among banks at 95 percent, having paid out 206.1 billion won in dividends over a net income of 217 billion won.

Woori and Citi came third and fourth with ratios of 73.6 percent and 42.3 percent.

While banks appear to have ample cash to give to shareholders, Kim says they’ve been hiring fewer people.

The country’s top seven banks hired 73,122 people as of the first half of this year, down 3 percent, or 2,234 jobs, from 2009.

Standard Chartered Bank Korea cut its workforce by 12 percent since 2009, while Citi bank cut its number of jobs by 16 percent.

Kookmin Bank, which implemented the peak wage system in 2008, has shrunk its staff by 21 percent or 5,319 between 2009 and 2014, mostly due to a freeze in hiring since adopting the system.

During the same period, Kookmin Bank’s dividend payout ratio jumped from 15 percent to 26.7 percent last year, data showed.

“While the nation is struggling with economic slowdown and household debts, [banks] are having a high-dividend party,” Kim Ki-joon said in a statement.

“They are pushing thousands of baby-boomer generation workers out of work with the excuse that they are having a hard time.”

BY PARK JUNG-YOUN [park.jungyoun@joongang.co.kr]