By Jhoo Dong-chan
Foreign banks in Korea said Tuesday they will pay nearly half of the earnings here to their foreign shareholders this year.
Their dividend payout ratio has been far larger than the figure of domestic banks, and industry observers denounced their practices for focusing only on "draining the nation's wealth" without fulfilling corporate social responsibility programs
According to financial circles, this year's dividends of Citibank and SC Banks are 93.8 billion ($87.6 million) and 93 billion won, respectively.
SC Bank's net profit in the first three quarters last year recorded 237.7 billion won, outnumbering its entire 2016 earnings. The figure is also up 15.9 percent from the previous year.
Considering the bank would have enjoyed a similar earning streak in the last quarter, SC Bank's 2017 net profit is expected to reach about 260 billion won.
If applying last year's dividend payout ratio of 35.6 percent, SC Bank's dividend would mark 93 billion won this year. However, the bank has recently decided to raise the ratio this year to satisfy foreign shareholders' high expectations, so industry observers say the total dividend may exceed 100 billion won.
Citibank reportedly earned about 268.2 billion won last year. The bank is owned by Citibank Overseas Investment Cooperation, an affiliate of the U.K.-based banking group. Applying its 35 percent dividend payout ratio, foreign shareholders of Citibank Korea are expected to receive 93.8 billion won in dividends this year.
Despite the bank's successful earning streaks in Korea, Citibank decided to reduce its 133 branches to 44 in Korea last year.
Citibank Korea CEO Park Jin-hei said that the bank will "start investing the country for its sustainable growth while advising not to pay dividends for 2017."
Park's announcement, however, turned out to be misleading as Citibank has decided to pay dividends anyway this year.
"In a bid to promote our shareholders' interests, Citibank has carried out providing dividends based on its affiliate's performance in each country," said the bank official.
"Citibank Korea is maintaining strong BIS capital adequacy ratio compared to domestic banks. The bank's decision to downsize its branch number reduced its earning cost while contributing its performance this year. So, Citibank Korea has decided to pay dividends to its shareholders."
An industry observer who is familiar with the issue said it is a long-standing practice.
"SC Bank paid a 15 billion won dividend to foreign shareholders when the bank suffered a 285.8 billion loss in 2014. The practice is common," he said under condition of anonymity.
"I understand the Financial Supervisory Service requested to halt the practice, but it is non-binding because of the introduction of the International Financial Reporting Standard this year."
Foreign banks in Korea said Tuesday they will pay nearly half of the earnings here to their foreign shareholders this year.
Their dividend payout ratio has been far larger than the figure of domestic banks, and industry observers denounced their practices for focusing only on "draining the nation's wealth" without fulfilling corporate social responsibility programs
According to financial circles, this year's dividends of Citibank and SC Banks are 93.8 billion ($87.6 million) and 93 billion won, respectively.
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| SC Bank Korea CEO Park Jong-bok |
Considering the bank would have enjoyed a similar earning streak in the last quarter, SC Bank's 2017 net profit is expected to reach about 260 billion won.
If applying last year's dividend payout ratio of 35.6 percent, SC Bank's dividend would mark 93 billion won this year. However, the bank has recently decided to raise the ratio this year to satisfy foreign shareholders' high expectations, so industry observers say the total dividend may exceed 100 billion won.
 |
| Citibank Korea CEO Park Jin-hei |
Despite the bank's successful earning streaks in Korea, Citibank decided to reduce its 133 branches to 44 in Korea last year.
Citibank Korea CEO Park Jin-hei said that the bank will "start investing the country for its sustainable growth while advising not to pay dividends for 2017."
Park's announcement, however, turned out to be misleading as Citibank has decided to pay dividends anyway this year.
"In a bid to promote our shareholders' interests, Citibank has carried out providing dividends based on its affiliate's performance in each country," said the bank official.
"Citibank Korea is maintaining strong BIS capital adequacy ratio compared to domestic banks. The bank's decision to downsize its branch number reduced its earning cost while contributing its performance this year. So, Citibank Korea has decided to pay dividends to its shareholders."
An industry observer who is familiar with the issue said it is a long-standing practice.
"SC Bank paid a 15 billion won dividend to foreign shareholders when the bank suffered a 285.8 billion loss in 2014. The practice is common," he said under condition of anonymity.
"I understand the Financial Supervisory Service requested to halt the practice, but it is non-binding because of the introduction of the International Financial Reporting Standard this year."
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