NH set to challenge top 4 banking groups

NongHyup Financial Group Chairman Kim Gwang-soo / Korea Times file

By Kim Bo-eun

NH NongHyup Financial Group's rapid growth is set to change the pecking order of the country's financial industry, with it challenging the top four banking groups ― Shinhan, KB, Hana and Woori.

NongHyup saw its earnings surge in 2019 by nearly 50 percent year-on-year, based on the solid performance of its affiliates. Observers within the industry say that it may not be long before the group catches up with the four majors, or even surpasses some of them

By net profit in 2019, Shinhan leads the groups, followed by KB, Hana and Woori.

Three of the four major banking groups posted record earnings last year. Shinhan, KB and Hana each saw their net profits grow by around 8 percent year-on-year.

Woori saw its net profit shrink 7 percent, based on a major scandal involving the bank's mis-selling of high-risk investment options. Meanwhile, NH's figure surged by 46 percent.

NongHyup group has seen rapid growth in recent years. In 2018, the group surpassed 1 trillion won in net profit and the figure jumped to 1.78 trillion won last year.

NH's total assets stood at 427 trillion won, exceeding that of Woori at 362 trillion won last year.

NongHyup attributes its growth to its focus on building long-term competitiveness.

In 2016, the collapse of the shipbuilding industry rocked NongHyup group's financial soundness based on 7 trillion won in credit exposure. Since then, the group focused on bringing down its percentage of non-performing loans, and the figure fell from 1.03 percent in 2017 to 0.58 percent last year.

NH group's growth is backed by the performance of its non-banking affiliates including its brokerage as well as insurance units.

NH Investment & Securities is contributing significantly to the group's earnings after NongHyup acquired the former brokerage unit of Woori and merged it with its own in 2015.

The brokerage unit saw its net profit jump 31.8 percent year-on-year to 476.4 billion won last year.

This was backed by enhanced competitiveness of its investment banking business, as well as wealth management and trading.

Both NongHyup's life and non-life insurance units also saw their earnings rise.

NongHyup Life Insurance went into the black last year, posting 40.1 billion won in net profit.

NongHyup Property & Casualty Insurance's net profit spiked 242.3 percent year-on-year to 6.8 billion won last year.

Both units have focused in the past years on strengthening their core capabilities and cutting costs, to enhance their competitiveness over the long-run.

NongHyup is also gearing up to boost overseas operations. The group pledged to reach 160 billion won in net profit from overseas business by 2025, at a strategy meeting that took place earlier this month. This is more than five times the earnings generated from overseas operations last year.

“The group has been focusing on getting affiliates in shape for steady, long-term growth,” an official of NongHyup's holding company said.