Hana Financial Group, the country’s third-largest financial group by assets, is out to carve out a bigger slice of the global market, as shown by recent calls from the group chairman for the company to look beyond Korea.
“The (home) market is already oversaturated, so there’s no point in competing here anymore,” said Kim Jung-tai at a press meeting.
He stressed that given the current situation, going global is imperative for future growth.
Kim’s comments come as Hana works to tackle the challenges currently faced by the banking industry.
The group’s banking units ― Hana Bank and the Korea Exchange Bank ― for instance, have been experiencing weak earnings for quite a while now due to persistently low interest rates that are undermining their net margins amid an economic slowdown. Loan loss reserves, at the same time, are going up.
|Hana Bank CEO Kim Jong-jun (third from left) and former KEB CEO Yun Yong-ro (second from right) pose together with other executives and Indonesian representatives at the launch of PT Bank KEB Hana in Jakarta on March 10. (Hana Financial)|
The banking group, however, is determined to regain its growth momentum by setting up overseas branches and engaging in joint ventures and cross-border mergers and acquisitions.
In 2012, Hana’s overseas revenues accounted for 15 percent of its total overseas earnings before tax. The company hopes to change this structure over the next decade so that overseas revenues take up 40 percent of the portfolio by 2025.
“We hope to increase our overseas revenue by nearly ninefold by 2025,” he said. “We’re aiming to make it into the world’s top 40 financial firms by then.”Targeting Asia
As a first step towards that goal, the group is targeting Asian neighbors such as Indonesia, the Philippines, Malaysia and China. Notably, KEB signed in February an agreement with the State Bank of India aimed at expanding investment opportunities and providing financial services in both countries.
Under the agreement, the two banks will work together to provide financial services to Indian workers here and also to Korean companies operating in India.
The group is also looking to establish a stronger banking structure by merging its banking units. In a similar vein, KEB’s Bank KEB Indonesia officially merged with Hana Bank in Indonesia. The financial group, which has been building its network in China, Indonesia and other Southeast Asian countries, is also seeking to tap into South America.
Hana also aims to make inroads into countries with abundant natural resources such as Russia, Kazakhstan, Uzbekistan and Ukraine. In particular, the group is seeking to bolster the lucrative private banking service in the Chinese market, targeting wealthy customers.
Hana Financial has established a strategic partnership with China Merchant Bank, the country’s sixth-largest lender, beefing up ammunition for its planned portfolio diversification and expansion of China operations.
Kim said Hana Financial Group would have an edge over the local lenders thanks to KEB’s sturdy global operations. Hana’s number of overseas branches soared after taking over KEB from U.S. buyout firm Lone Star Funds in 2012, with the tally currently at 128 in 24 countries as of February, the most among Korean lenders.
By Oh Kyu-wook (email@example.com