Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Will Shinhan surpass KB in 2021 earnings?
KB Kookmin Bank CEO Hur Yin, left, and Shinhan Bank CEO Jin Ok-dong
By Lee Min-hyung
By Lee Min-hyung
With the nation's two largest banks extending their neck-and-neck rivalry throughout 2020, eyes are on which one between KB Kookmin Bank and Shinhan Bank will take the leading spot this year amid unceasing virus uncertainties.
For now, KB is taking the lead in 2020 earnings against Shinhan. By September last year, KB reported an accumulated net profit of 1.88 trillion won, gaining a slight edge against Shinhan's 1.76 trillion won during the same period.
In 2019, KB also defeated Shinhan by reporting an annual net profit of 2.44 trillion won, up by 110 billion won from that of Shinhan.
Even if major financial holding firms are seeking to expand their non-banking earnings amid the industry's structural slowdown induced by continuous low interest rates, they still rely on revenues from the traditional banking sectors ― particularly the margin between deposit and loan interest rates.
Taking increased revenue from the conventional cash-cow banking business also raises the likelihood for the lenders' holding firms to invest more in non-banking and emerging digital sectors at a crucial time when the financial market undergoes a major paradigm shift with the rise of non-face-to-face transactions.
With Shinhan Bank CEO Jin Ok-dong extending his leadership for another two years in the recent year-end reshuffle of top management, expectations are that he will take more aggressive steps this year to regain its title as the leading bank.
Shinhan Bank defeated KB Kookmin Bank in first-quarter earnings in 2020, but it has since ceded the frontrunner position to its archrival during the second and third quarters.
In 2021, Shinhan Bank aims to widen the portion of its non-interest revenues with a focus on digital transformation.
“Generating more digital revenues is part of Shinhan's group-wide vision this year, and we are going to expand earnings from global business to expand and stabilize our business portfolio,” an official from Shinhan said.
According to data from Shinhan Financial Group, its earnings reliance on non-banking sectors is on the decline. As of the end of 2019, net profits from the group's non-banking business took up 33.6 percent out of the total. But the figure has increased to 41.3 percent as of the end of September.
The group plans to widen the portion in the non-banking sector for greater sustainability. The COVID-19 shock has come as a bane for lenders, as this pushed economies across the globe to maintain super-low interest rates.