By Kang Seung-woo
Starff reporter

Under the leadership of its CEO Lee Chong-hwi, Woori Bank has become a “good bank.”

It is the result of a combination of efficient management, prudence and performance-driven strategy, which the 61-year-old career banker has put into practice since his June 2008 inauguration.

His efforts have paid off.

Last year, the bank posted a net profit of 953.8 billion won ($793 million), up 719.8 billion won or 307.7 percent from the previous year, making it the best-performing bank.

It even beat the perennial pace-setter, Shinhan, which reported 748.6 billion won in net profit.

Woori’s net profit was tallied at 5.17 trillion won, up 943.1 billion won. Its non-interest income, hit hard by derivatives investment losses in 2008, also grew by more than 1 trillion won.

His predecessor Hwang Young-key dabbled in derivatives investments but their value dropped drastically during the global crisis in 2008, causing the bank enormous losses.

That appears to be completely behind Woori. Lee is looking for solid numbers for this year.

“We will try to maintain the pace of the first half in the latter part of the year,” Lee said during a recent interview with The Korea Times.

“Although it is a tall order to expand 7 percent this year, we will strive to ensure a proper growth.”

For the first quarter of this year, the second-largest bank by assets logged 459.8 billion won, up 174.5 percent from the same period last year, raising the possibility of rejoining the exclusive club of firms and financial institutions that record an annual net profit of 1 trillion won.

The bank reported 1.78 trillion won in 2007.

For the second quarter, Lee preempted the markets by saying that the enlarged provisions to be added as the result of an assessment of corporate risks on a constant basis. Woori and other banks are expected to announce their April-June performances soon.

The writing has been on the wall for some time. Over 60 firms have been under restructuring programs due to escalating fears of insolvency on June 25 at the latest.

“Although we picked 65 companies, we need to monitor small and medium enterprises affiliated to them due to the possibility of insolvency,” said Lee, the chief coordinator of the creditor banks. “Bad loans may deal a blow to the banks’ second-half plans, so they have been increasing loan loss reserves in preparation for more corporate defaults.”

Regarding talks of a megabank, Lee is very cautiously, saying, ““No one can offer a clear answer on the subject. There are pros and cons.”

Woori was put under state control 10 years ago at the height of the currency crisis. The state-run Korea Deposit Insurance Corp. (KDIC) holds a controlling 57 percent stake.

“Our status as a state-controlled bank puts us into a constant series of reviews and is restrained by many more regulations than private banks are subject to,” he said. He also believed that being under state control for a long period of time is also affecting the mentality of employees.

The government plans to announce the privatization plan for Woori later this month after being delayed once. But it is widely believed that the Woori privatization may not be possible this year as scheduled because, among other things, KB Financial, which was considered as the leading suitor of Woori, has given up an immediate takeover bid, with new Chairman Euh Yoon-dae saying any KB bid for it will be in a a “couple of years.”

“Through the global financial crisis, the megabank issue appears to be losing momentum, but it is sorry to see no Korean commercial bank able to finance a big contract,” he said. A megabank is a pet project of President Lee Myung-bak, who felt a strong need for such a big bank after finding no Korean bank large enough to finance a long-term $2 billion project to furnish the United Arab Emirates with nuclear power plants earlier this year.