Financial firms seek to diversify profit amid control of banks’ loans


The nation’s four major financial groups are revitalizing their competition to expand non-banking businesses to overcome the saturated banking industry.

Though chiefs of the groups ― KB, Woori, Shinhan and Hana ― had vowed to enhance the non-banking sector, the ratio of their dependency upon the banking business is still high.

The ratio of banking business accounts for more than 80 percent of the total, far surpassing the three major non-banking units ― brokerages, credit cards and insurance.

This year, the four players are poised to realize their earlier business goals to diversify their earnings portfolio as banks have faced stricter regulatory hurdles in issuing loans to households and smaller enterprises.

They are focusing on the mergers and acquisitions market to overcome the bank-oriented profit-taking structure.

Shinhan Financial Group is considering taking over at least one financial company in the stock brokerage and insurance market.

While it has been taking a wait-and-see attitude amid uncertainties in the wake of the eurozone debt crisis, a Shinhan executive stressed that “it is necessary to seek opportunities to expand the scale of securities and insurance sector.”

The group’s credit card sector could secure competitiveness thanks to M&As. Shinhan Card has been enjoying the No. 1 position in the local credit card industry by acquiring LG Card.

KB Financial Group is also striving to expand its insurance and securities units.

It is set to participate in a bidding competition to take over Netherlands-based ING Group’s Asia-Pacific operations.

As ING Life holds the position of fifth or sixth in Korea, heated competition is expected if it is put up for sale.

For the brokerage sector, KB Financial continued to expressed its intention to acquire Woori Investment & Securities.

Woori Financial Group, which aims to launch a stand-alone credit card operation, is pinning hopes on an early law revision so that its goal can be attained this year.

Though the financial group has sought to spin off a credit card unit from Woori Bank for about a year, financial regulators are taking a skeptical position over the move amid heated competition in the card industry.

Hana Financial Group has unveiled its business policy to bolster the insurance sector.

While the group has been operating a joint life insurance venture in coordination with HSBC, it is considering expanding the insurance business via mergers and acquisitions.

Hana Financial, which acquired Korea Exchange Bank in February, also plans to strengthen the credit card unit by push KEB’s credit card unit and Hana-SK Card.

By Kim Yon-se (kys@heraldcorp.com)