What is remarkable is that this time the growth was not just an expansion of the number of branches in key developing countries, but also an improvement in the general level of profitability, even though the global financial market continued to remain slow.
South Korean banks have increasingly been looking beyond the domestic market after suffering profit decreases due to a combination of causes including low interest rates, sluggish consumption, scandals and, of course, a growing number of business opportunities abroad.
The 64 overseas offices of Woori Bank yielded a total operating profit of $69.54 million in the first quarter this year, up by 116.6 percent from last year, according to bank officials.
The bank’s domestic net profit, however, fell by 0.07 percent during the same period, reflecting business challenges such as its continuing struggle to find a new owner.
Other leading private banks such as Shinhan Bank and Korea Exchange Bank recorded $39 million (up 40.5 percent) and $50.2 million (up 21.4 percent), respectively, in first-quarter operating profits.
Special function state-run banks, such as Korea Development Bank and the Industrial Bank of Korea, upped their quarterly profits by 21.7 percent and 3.1 percent, respectively.
But KB Kookmin Bank remained taciturn and kept its quarterly overseas performance off the record. Since early this year, the bank has been caught in a series of scandals, ranging from a customer information leak and loan fraud probes to a recent leadership conflict that is likely to bring penalties upon its president Lee Kun-ho.
“Our original goal this year was to expand the overseas network and to reinforce our nonbanking business sectors, but this was largely discouraged due to the series of scandals,” said an official of KB Financial Group.
Other banks, however, succeeded in allocating their workforce to their overseas branches, with some focusing on their existing offices and others striving to open up new offices in key trade partner states.
In addition to the physical expansion, most of them also succeeded in elevating their net profits by decreasing the ratio of nonperforming loans.
In the case of KEB, the loan default rate in the first quarter this year was 0.3 percent, halfway down from 0.61 percent in the previous year, according to officials.
“The local banking industry has long been in a saturated stage and the most efficient way out is to optimize the profitability in the global market, where there is still room for expansion,” said an official of KEB.
By Bae Hyun-jung (firstname.lastname@example.org)