KB steps up to top position in 2020, pushing Shinhan to second place

The headquarters of KB Financial Group in Seoul. / Courtesy of KB Financial Group

KB, Shinhan and Hana log record-high annual net profits in 2020

By Anna J. Park

KB Financial Group retook the number one position in terms of net profit among major financial groups last year, after amassing a record-high annual net profit of 3.45 trillion won ($3.06 billion), up 4.3 percent from 2019. This is welcome news for the group, which last led the market in 2017. KB's long-time rival Shinhan took the leading position in 2018 and 2019.

“Based on solid growth in loans, interest profits increased consistently throughout the year. The non-banking sectors' brokerage fees were also sharply up as well. A balanced improvement in performance and growth of the non-banking sector through acquisitions led to the record-high net profit,” an official from KB Financial Group explained.

Shinhan Financial Group also logged a record-high annual net profit last year despite the impact from the COVID-19 pandemic. The group released a public announcement Friday afternoon that last 2020's net profit stood at 3.41 trillion won, up by 0.3 percent from the previous year.

“The banking sector's solid asset growth is attributed to a 1.9 percent increase in interest profit. Non-interest profit also rose by 7.9 percent last year, as stock trading fees from the brokerage unit increased by 125 percent year-on-year,” Shinhan Financial Group stated in a press release. “Despite the uncertain market conditions in and outside of the country, the financial group has succeeded in logging seven consecutive years of increased net profits.”

The reason that Shinhan couldn't overtake KB last year was largely due to a huge one-time cost during the fourth quarter. Shinhan suffered a loss of 267 billion won during the last quarter due to its engagement in the mis-selling of Lime funds. The financial giant said it hasn't yet decided about dividend payouts.

Hana Financial Group also announced Friday afternoon that it too recorded an all-time high net profit of 2.63 trillion won, up 10.3 percent year-on-year. The financial group attributed this to its efforts to cut costs as well as diversification of its investment portfolio.

Despite various costs arising from the mis-selling of private equity funds, the financial group stated that “special retirements and reserves in preparation for further impacts from COVID-19, the group's cohesive efforts to cut costs, non-banking sectors' giant growth and diversification of investment portfolio all contributed to the annual performance.”

Hana Financial said it has decided to pay out 20 percent of its net profits in dividends. This payout ratio is a smaller than 2019's 26 percent. The group explained that it considered market uncertainty as well as the financial authorities' recommendation to cut back the payout amount.

Meanwhile, Woori Financial Group logged an annual net profit of 1.3 trillion won last year, down 30 percent from the previous year. The financial group explained that this was mainly due to a fall in non-interest profit, such as card fees. Yet the financial giant said it had kept an ample amount of reserves in preparation for further COVID-shocks, and it expects a turnaround this year.