Outgoing KB Financial Group chairman stresses expansion in Indonesia

Finance

Published: 25 Sep. 2023, 16:55 Updated: 25 Sep. 2023, 19:28

Outgoing KB Financial Group chairman stresses expansion in Indonesia

KB Financial Group Chairman Yoon Jong-kyoo speaks at a press conference held at the bank office in Yeouido, western Seoul, on Monday. [YONHAP]

Outgoing KB Financial Group Chairman Yoon Jong-kyoo stressed KB’s will to expand business in Indonesia, calling it its “second mother market.”

Yoon, who has served as the group's chairman since 2014 and is set to step down in November, said that KB is preparing to provide total solutions for financial services in the Southeast Asian country.

“Apart from banking, KB offers brokerage, asset management, capital and insurance services [in Indonesia], and we’re preparing to provide one-stop total solutions” in the market, Yoon said during a press conference held at the KB Kookmin Bank office in Yeouido, western Seoul.

“Normalization of PT Bank KB Bukopin Tbp has slowed due to the outbreak of Covid-19, but we plan to reduce bad debt and complete systematic improvements, like digitization, by June next year,” Yoon said.

He added his biggest regret is failing to make KB into a global top 10 financial firm during his term, citing the unfavorable commission system and the three-year term as some of the reasons for the failure.

“I vowed to turn KB into the Samsung of the financial sector upon my inauguration. KB Financial Group’s global ranking sits at around 60th.”

The commission system for Korean companies’ maintenance of bank accounts is comparatively less favorable than abroad.

Financial firms “have to raise the noninterest income, but profit raised from commission is too weak in Korea.” Yoon added,

“Adopting a commission fee just for keeping an account open raises the noninterest profit by 10 percent, according to a research center from KB.”

Due to the lack of commission for keeping a bank account, many individuals make multiple accounts, weighing down the financial company’s data processing and raising maintenance costs.

Yoon added that a dramatic rise up the ranks can't be achieved by a single financial firm, and requires serious deliberation from the authorities and the market as a whole.

Yoon said a three-year term is too short for a chief to set out long-term plans.

“For our financial company to become a global top-tier firm, a long-term perspective is needed. But how to make long-term plans and increase performance in a system that changes its CEO every three years needs to be seriously considered,” Yoon said.

The average tenure for CEOs of companies listed on the S&P 500 was 10.2 years in 2018, according to the Harvard Business Review. Yoon added that more recent data from the Economist showed that the average tenure of the CEOs was 7 years over the past decade.

Yoon will be replaced by Yang Jong-hee, KB Financial Group’s current vice chairman. He is expected to be appointed as the chairman at an extraordinary meeting of shareholders scheduled to take place in November.

“I believe KB Financial Group’s nomination of chairman Yang Jong-hee will ensure major steps forward for the organization," Yoon added.

BY JIN MIN-JI [jin.minji@joongang.co.kr]