OneDo Innovation boosts Woori’s competitiveness
By Kim Jae-won
Woori Financial Group reduced costs by more than 210 billion won in 2010 under the group’s new business motto “OneDo Innovation,” the country’s No. 1 financial group said recentlly.
OneDo Innovation is designed to remove useless elements in terms of organizational structure, human resources and business processes. It also refers to changes in mental and behavior patterns, which aim to make the group a “low-cost and high-effectiveness” organization. “One” symbolizes the first and “Do” represents practice and activity.
Woori Financial Chairman Lee Pal-seung proposed the program to get the state-run financial group on track for sustainable growth.
“The local financial industry is becoming globalized fast, and its business circumstances have also changed a lot. We need to prepare for the change with OneDo Innovation to survive in this competitive market,” the group said in a press release.
The project is working quite well, producing billions of won in savings. The group saved 210.7 billion in 2010 on 257 new projects.
“Inheritance deposit process change” was one program. The lender’s retail business strategy division changed the complicated rules of the process to reflect revised civil law. Before the reform, all heirs and heiresses were required to attend the lender’s branch to get inheritance deposits. However, the lender changed the regulation to allow just one representative of the family to complete the process.
Thanks to the change, the lender attracted more customers regarding the deposit products, and cut costs by 2 billion won.
The company launched a taskforce team for the OneDo project in May 2009, and made the temporary team permanent organization in 2010 as its Business Innovation Bureau. The bureau put subsidiaries in all of the group’s affiliates, and formed a committee, consisting of each of their strategy executives.
Programs of OneDo Innovation
The first goal of OneDo Innovation is to make 10 to 20 percent more in profits. To achieve this, the group runs four programs ― WhyDea, WhyTing, OneDo and Maestro.
WhyDea is a Koreanified combination connecting why and idea. It encourages employees and executives of the company to ask themselves questions on how to increase effectiveness in their fields.
WhyTing is from why and meeting, and is done at the level of team and branch.
OneDo project is to spread good examples of WhyDea and WhyTing to the whole group, while Maestro refers to a leader, who orchestrates the process.
Woori Financial’s net profits go up 28.2 percent
The group’s efforts to change the organization and usual habits with the innovative project boosted its financial results last year. Woori Financial said its earnings shot up 28.2 percent in the fourth quarter from a year earlier thanks to expanded interest income and a drop in loan-loss provisions.
Net profit came to 201.1 billion won ($180.1 million) in the October-December period, compared with 156.8 billion won in the same period a year earlier, the group said.
Revenue came to 6.8 trillion won in the fourth quarter, down 17.2 percent from the last three months of 2009 with operating profit expanding 38.9 percent to 264.5 won.
For all of 2010, Woori Financial's net earnings reached 1.2 trillion won, growing 21.1 percent from 1.03 trillion won the proceeding year, it added.
Woori Financial's strong bottom-line is largely thanks to a recovery in lending margins. The group's net interest margin (NIM), the difference between deposit and lending rates that indicates loan profitability, rose to 2.39 percent in December, up 0.21 percentage point from three months earlier, it said.
The NIM growth helped bring Woori Financial an accumulated 6.5 trillion won in interest income last year, up 11.9 percent from 2009, the group added.
A reduction in costs to cover loan losses was also responsible for the earnings growth.
The group added 599.5 billion won to provisions used to cover loan losses in the fourth quarter, less than 775 billion won spent in the same quarter in 2008, it said.
Rosy future after privatization
Woori Financial said the stock market will appreciate the group’s value if the government’s privatization plan is revealed. Shares of Woori Financial were traded at 13,800 won Tuesday afternoon, relatively lower than its rivals.
The state-run the Korea Deposit Insurance Corp. has 57 percent stake in the group, and the government plans to sell the stake. “Our company’s market value is underestimated. It will go up when the privatization plan is on the track,” said an employee of the group.