By Kim Jae-kyoung
Staff Reporter
With a setback of Kookmin Bank coinciding with an advancement of runner-up banks, such as Shinhan and Woori, a leading bank is dying out of the landscape of the Korean banking industry.
Kookmin still ranks top in terms of total asset by slight margin, but it has lost the role of a leading bank, as it has become unable to influence markets using its dominant position as before.
In addition, Shinhan Financial Group has outrun the nation's largest lender in terms of market valuation, meaning that markets are valuing Shinhan higher than Kookmin.
``Kookmin used to stand out as a leading bank and there was no competitor to threaten its position, but its walkover is actually over and now it is a brand new game,'' Meritz Securities analyst Im Il-sung said.
``Technically speaking, there is no leading bank at the local banking industry. Big three banks' assets and market capitalization have become increasingly homogenized,'' he added. ``A leading bank should set the interest rate trend and have superior position in commission rate but there is no such bank anymore.''
The first-quarter earnings results have put the largest lender into further difficult position. According to each bank, Koomin saw its profitability exacerbate the most among the big three in the first quarter, with its net profit falling by 47 percent to 631.5 billion won from a year ago.
Net income for Shinhan Financial Group and Woori Financial Holdings decreased by 35 percent and 38 percent, respectively, to 602.4 billion won and 546.3 billion won.
``There is no definition of a leading bank, but in general, total assets, net profits and market capitalization are considered key factors to determine a leading bank,'' a Korea Institute of Finance economist said.
``So far Kookmin has been superior to other banks, but now big three banks are competing in the leader's group in all those categories,'' he added.
Kookmin has the total asset of 245.6 trillion won at the end of March, only slightly higher than Woori (236 trillion won) and Shinhan (232.3 trillion won).
In terms of market capitalization, Koomin and Shinhan are neck and neck, with Shinhan Financial Group reaching 22.5 trillion won on May 8, almost equivalent to the Kookmin's 22.7 trillion won.
In the PBR or price to book ratio, a ratio used to compare a stock's market value to its book value, Kookmin gave up its top position to Shinhan, with its PBR standing at 1.3, below the Shinhan's 1.5.
This ratio gives some idea of how markets evaluate each company, and the higher the ratio, the better the company is valued by the markets.
Some analysts say that Shinhan has already outpaced Kookmin in terms of stability and market valuation.
They point out that Shinhan is in a better position to become a leading bank as its holding company line-up has been already set up.
``Looking into market capitalization and stock price trend, Shinhan has already overtaken Kookmin,'' Daewoo Securities Ku Yong-uk said.
``Stability of stock prices and higher PBR than Kookmin suggests that Shinhan has got in a better footing to become a leading bank,'' he added. ``Shinhan is trying to focus on enhancing efficiency under the existing lineup, while Kookmin is pouring all the efforts to transform itself into a holding company.''
``How well Kookmin capitalize on trials and errors Shinhan and Woori made during their course of becoming a holding company will decide whether Kookmin will keep its leading position in the future,'' he pointed out.