Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Banks expand property rental biz amid downsizing
By Kim Bo-eun
By Kim Bo-eun
Banks are enjoying a steady increase in revenue from renting out spaces in office buildings, which they have long-term leases on, after closing down their branches as they streamline operations amid the rapid digitization of banking.
Profits made by the four major banks ― Shinhan, KB Kookmin, Woori and KEB Hana ― from real estate grew from 58.8 billion won ($49.54 million) in 2017 to 63.5 billion won in 2018.
This comes as banks are shuttering branches as the increasing use of mobile banking services eliminates the need for physical visits to branches.
The four banks had 3,548 branches as of the first quarter of 2019, down 26 from the same period a year earlier.
They have been closing an average of 100 branches annually since 2015.
"Shutting down branches is a trend that cannot be defied, as more customers turn to mobile banking services," a bank official said.
As a means to deal with empty branches, banks are renting them out. They are also leasing out on a larger scale ― such as buildings ― to secure profitable revenue sources.
Shinhan Bank, which reaped the largest profit at 27.56 billion won last year, is renting out a seven-story building in Myeong-dong, central Seoul, after completing its renovation. The building houses shops and a bakery.
Woori Bank opened a 13-story building in Bulgwang-dong, northwestern Seoul, after completing its renovation in May. The building houses clinics, a pharmacy and franchise coffee shop among others.
"Regulations have been eased to allow banks to lease out freely," a Woori official said. "We also plan to rent out our building in Gasan-dong."
Regulations were revised in 2016 to enable banks to rent out the real estate they either own or have long-term leases on.
Kookmin plans to renovate and lease out buildings housing its branches in Itaewon and Nowon-gu in Seoul and Bupyeong-gu in Incheon by 2020.