Shinhan Bank Ranks Top in Profitability
By Kim Jae-kyoung
Staff Reporter
Shinhan Bank, the nation's second largest lender by assets, was the most profitable in the sector last year, with its per-capita net profit hitting the highest among six institutions ― the others being Kookmin, Woori, Hana, Korea Exchange Bank (KEB) and the Industrial Bank of Korea (IBK).
According to data from each bank, 81,977 employees at the six lenders generated a total of 5.23 trillion won ($3.74 billion) in net profits in 2008, 64 million won per employee.
By bank, Shinhan's per capita profit reached 111.54 million won last year, the highest among the six, with 12,970 employees generating 1.45 trillion won in net profits.
KEB ranked second with per capita income of 102.14 million won, followed by IBK with 81.39 million won and Kookmin with 58.22 million won, down sharply from the previous year's 130 million won and 102.9 million won, respectively. Hana Bank posted per capita income of 43.72 million won.
Woori Bank showed the worst profitability, with its per capita profit falling to 15.67 million won, the lowest among local lenders, due to mounting losses from its overseas investments.
Two regional banks ― Kyongnam and Kwangju ― recorded per capita income of 97.72 million won and 63.55 million won, respectively, above the average of the six commercial lenders.
The profitability gap between lenders has widened sharply as some banks had to set aside huge amounts of loan-loss provisions due to growing deficits caused by the prolonged economic slump.
Woori has set aside 1.04 trillion won in provisions for loan losses associated with its overseas investments in credit default swaps (CDS) and collateral debt obligations (CDO) last year alone. It also put aside 1.6 trillion won in loss reserves for loans to construction firms and shipbuilders.
Kookmin and Hana set aside 1.14 trillion won and 1.2 trillion won in loan-loss provisions, respectively.
``In general, per-capita profits fell last year due to the deepening global economic crisis and volatile market conditions,'' a local bank official said.
``Despite the financial and economic turmoil, some banks showed relatively stable performances by focusing more on risk management and diversification of revenue sources, which expanded the profitability gap between banks,'' he added.