By Lee Hyo-sik
Staff Reporter

After recovering quickly from the worldwide financial market turmoil, Kookmin Bank is looking to further solidify its position as Korea's largest retail lender in the post-crisis era by improving its bottom line and strengthening its risk management.

It also aims to build a more customer-friendly sales force, create synergy with its affiliates and introduce ``green'' and other innovative financial products to become a leader in Asia and beyond.

The bank, originally established in 1963 through a merger with the Housing & Commercial Bank in 2001,
has grown into a financial entity with 280 trillion won worth of assets under management and some 26 million customers.

``In 2010, governments around the world will tighten existing regulations and introduce new ones on banks in an effort to prevent the recurrence of the global financial crisis. Also, regulators will likely impose a range of rules on financial services companies to better protect the rights of retail customers. With these changes, we will face much fiercer competition from our rivals at home and abroad,'' CEO Kang Chung-won said, stressing Kookmin Bank should transform itself into a more customer-friendly organization.

Kang then said he will make every effort to consolidate the bank's leading position this year through reform and innovation, adding it will emerge a global bank in the not too distant future through the provision of high-quality services to customers, its advanced financial and managing systems, and its nurturing of talented employees.

``Our adoption of global management standards will not only beef up our dominant status in the domestic sector, but also set up a strong foothold overseas. The bank plans to produce a talented and competitive workforce globally, and promote ``green finance.'' We will also help small firms and low-income brackets receive necessary financial services and fulfill our corporate social responsibility,'' the CEO said.

Improve Profitability

With surging non-performing loans and investment losses, Kookmin's financial soundness and profitability worsened sharply over the past year, hit hard by the international financial market crisis and the economic slump. But with the easing of the credit squeeze and improving conditions, the bank has begun performing better.

``Despite improving overall market conditions, there are still a host of downside risks, including a possible global double-dip. We should remain vigilant this year and make more efforts to cut costs and boost our financial soundness. We should also adjust our asset portfolio to generate a stable cash flow and achieve sustainable growth,'' Kang said.

The bank will continue to slash non-performing loans and default ratios, and improve its net interest margin (NIM) through effective asset management. To secure a more stable income source, it plans to boost its non-interest margin businesses.

Learning from the collapse of the global financial market, Kookmin plans to further strengthen its risk management this year and beyond to improve financial health.

``With regulators tightening rules on banks' financial soundness, we need to find a more stable and cost-effective way to boost our liquidity and improve our loan-deposit ratio. We should also put in place an effective contingency system to better cope with unforeseen market uncertainties at home and abroad,'' the CEO said.

Customer-Friendly Bank

To better serve clients and maximize corporate value, Kookmin will make more efforts to introduce state-of-the-art and customer-friendly products and services.

Kang said the newly-completed electronic network connecting the bank and eight other affiliates will play a crucial role in meeting customers' needs and launching a range of differentiated products and services. ``If we do not offer more efficient and convenient financial services to customers than our competitors, we will soon lose our leading bank status. The most important thing is to enhance customer satisfaction, meaning all employees should make an all-out effort to become more consumer-friendly.''

He has also been promoting the adoption of international ``best practices'' by overhauling the corporate and organizational structure, urging employees to work in a ``precise, swift and customer-friendly'' manner.

The bank topped the Korea Customer Satisfaction Index (KCSI) of the Korea Productivity Center in 2009 for the third consecutive year. Consulting firm Hewitt Associate named Kookmin this year's best workplace for the second straight years, citing high worker satisfaction and a worker-friendly environment.

``We should become a `big, fast, flexible' bank. It is only possible when all Kookmin family members are equipped with an innovative mindset and a creative attitude. To further boost customer value, we should continue to make efforts to offer high-quality, differentiated financial products and services at low costs,'' the CEO said.

Additionally, as a leading entity under the KB Financial Group, the bank will increase cooperation with other units and create positive synergistic effects, refrain from excessively competing with other lenders and set the market trend to emerge as a universal financial group in Asia.

Social Contribution & Green Finance

To become a responsible corporate citizen, Kookmin will continue to engage in a range of social contribution activities, and extend affordable credit to those who have difficulty borrowing money.

Among other efforts, it has set up a microcredit business by raising a total of 30 billion won. The bank will support scale credit loans for basic livelihood security recipients and small business owners with fluctuating income. The move is the bank's latest effort to contribute to social welfare by aiding those in low-income brackets.

Additionally, Kookmin has decided to step up its efforts to help struggling firms unable to pay back debt due to snowballing interest.

The lender has been rolling over maturing loans for companies and quickened its lending procedure by allowing branch managers to make arbitrary decisions over the extension of secured loans.

``We have done our utmost to help small local businesses overcome the economic crisis over the past year. We will continue to develop various products and programs for companies so they can play a role in reviving the economy,'' Kang said.

Taking the lead in local financial firms' campaigns for the environment, Kookmin has launched a green finance taskforce and introduced a wide variety of environmentally-friendly financial products.

In order to nurture green finance more systematically, the lender launched a taskforce called ``Green Finance Management Team'' last February. In addition, the bank formed a green finance consultation committee comprised entirely by executives to secure consistency.

The lender signed a contract Kibo Technology Fund to provide 750 billion won in loans to eco-friendly businesses. Under the contract, Kibo guarantees the loans offered to green companies.

It is also applying the concept of environmentally-friendliness to its management. Executives and staff members can use bicycles to get to other buildings for meetings, and at its headquarters and some major branches use energy efficient LED (light-emitting diodes) lights.

Expand Overseas Operations

With an increasingly saturated domestic financial sector, KB plans to make inroads into other countries to find new sources of growth. In particular, it is trying to build an extensive business network in China and Southeast and Central Asia dubbed the ```KB Triangle Network.''

The bank recently decided to team up with the International Finance Corp. (IFC) to acquire a controlling stake in Kazakhstan's Bank Center Credit (BCC) ― in which KB currently owns a 30.95 percent stake. Under the joint investment plan, IFC and Kookmin will purchase an additional 19.06 percent stake in BCC through additional stock purchases and new share offerings ― 10 percent for IFC and 9.06 percent for Kookmin ― which would increase their combined stake to 50.01 percent.

It has also opened a number of branch offices in cities across Asia over the past three years and plans to open several more in China and Vietnam.

But Kang said that given the lingering uncertainties over the global financial market, the bank will refrain from taking over foreign lenders for the time being, but will actively establish branch offices throughout Asia.

leehs@koreatimes.co.kr