COVID-19 risk management to determine fate of bank CEOs
From left: Suhyup Bank CEO Lee Dong-bin, KB Kookmin Bank CEO Hur Yin and Shinhan Bank CEO Jin Ok-dong / Courtesy of each bank
By Anna J. Park
Many CEOs of major banks are nearing the end of their terms, drawing attention on who will keep their positions amid turbulent market conditions from COVID-19.
Suhyup Bank CEO Lee Dong-Bin's three-year term will expire on Oct. 24, and the bank is now preparing to form a CEO recommendation committee. Four votes out of five committee members are necessary for a candidate to be appointed as the bank's leader.
As incumbent CEO Lee has received positive reviews from market insiders for his successful leadership of the bank's asset diversification, digitization drives and overseas expansion, he is a strong candidate to be reinstated for one more term at the bank.
During his term, Lee has strengthened retail business, as the bank adjusted its portfolio towards a more balanced ratio of 45 percent household loans and about 55 percent corporate loans. The bank also opened its first branch in Myanmar, advancing into the Southeast Asian market.
A decreased net profit during the first half due to the pandemic could be a burden factor for Lee winning a consecutive terms. The bank's first-half net profit this year saw a 15.4 percent decrease from last year's 162 billion won ($136 million).
KB Kookmin Bank's chief Hur Yin is another incumbent CEO who is viewed among market watchers to probably keep his post, after his current term finishes in November.
After being appointed in November 2017, he successfully wrapped up his first two-year term last November. Based on his achievements in leading the bank's digitization drive and solidly increased net profits during his tenure, he was tapped to lead the bank for one more year.
CEO Hur led the bank's record-high annual net profit of 2.43 trillion won last year, which was up by 8 percent from the previous year and was the largest net profit among local major banks. The bank has also avoided controversies surrounding mis-selling of fund products unlike other major banks.
Based on such stable leadership, KB Kookmin Bank raked in 981 billion won worth of net profit during the second quarter, a whopping 34.6 percent increase from the same period last year. Together with the first quarter, the bank logged a net profit of 1.71 trillion won during the first half, only a 6.8 percent fall year-on-year. Given the pandemic-led shock, the bank's performance is assessed favorably, increasing the bet on another term for him.
Meanwhile, Shinhan Bank's CEO Jin Ok-dong is facing a crossroads, as the bank's third-quarter performance later this year will function as a linchpin of his serving one more term or not, after his current two-year term finishes in December.
Shinhan Bank reported a quarterly net profit of 514 billion won in the second quarter, a 22.5 percent fall from the same period last year. The bank was also unseated as the nation's top profit-generating bank by its rival KB Kookmin Bank.
Together with the first and second quarters, the bank's net profit of 1.14 trillion won also fell by 11 percent year-on-year, losing to KB Kookmin Bank's 1.24 trillion won during the first half.
Since Shinhan Bank has to solve legal disputes over the Lime fund fiasco, retaking the top bank title doesn't seem easy. CEO Jin has focused the bank's digital strategic goals to enhance efficiency. Whether he would serve one more year or not would depend on the third-quarter trajectory of the bank amid the extended pandemic.