SC Bank CEO challenged to boost profitability
New investment can be a double-edged sword for Park
By Lee Kyung-min
Standard Chartered Bank Korea CEO Park Jong-bok
Standard Chartered (SC) Bank Korea CEO Park Jong-bok is facing the tall task of bolstering profitability in 2019.
After securing 100 billion won ($88 million) in extra investment from its parent holding company Standard Chartered Group in January, Park may have felt greater pressure not only to keep his post but also to keep the group committed to the Korean market.
The group, which acquired the Korean unit in 2005, had not made any investment between 2008 and 2018.
The rare investment is a strong indication that the group has faith in Park but the capital injection can be a double-edged sword for the Korean CEO who helped the firm post over 200 billion won in net income for three consecutive years since 2016.
The bank posted a net income of 200.9 billion won in the first nine months in 2018. The lender is estimated to have made net income similar to or greater than that in 2017 when the figure was 273.6 billion won.
It was a major turnaround from 2015 when the bank posted a net loss of about 285.7 billion won. Park took the helm in 2015.
If Park successfully boosts profits of the Korean unit of the British banking group, he may strengthen his foothold in the group. If not, he may lose trust from group chairman Bill Winters.
Although the bank's profits have improved over the past few years, its profitability still remains well below the target suggested by its parent company.
SC Bank Korea's return on equity (ROE) stood at 5.58 percent in September, 2018. In 2016, Group CEO Winters has urged all global operations to increase their ROE to 8 percent by 2018 and 10 percent by 2020.
Against this backdrop, Park is launching a major business drive with a focus on wealth management (WM) and digitalization to improve the lender's profitability and maintain sustainable growth.
His drive was evidenced in his “town hall” speech at the bank's headquarters in Seoul, Jan. 4.
“There is a clear opportunity for us to become a leading global bank in Korea. We have the capability to differentiate ourselves and innovate,” Park said at the meeting.
“Let's have confidence and implement a well-prepared strategy to the full extent to achieve exponential growth,” he added.
Under the slogan “React,” Park has vowed to focus on business portfolio diversification and risk management.
Park aims to have WM generate up to 25 percent of the bank's total net income, up 15 percent from the current 10 percent.
Park will continue with the current WM system whereby officials with private banking (PB) expertise are available for consultation at every branch of the bank nationwide to help them provide customers with more tailored, need-based financial services.
The seemingly counter-cost-effective approach seeks to differentiate the bank from other existing ones that provide WM centers to service customers with substantial assets or income.
“The plan is to set us apart from other banks that mainly ― or mostly ― prioritized customers with large assets. We seek to include every customer with small- to moderate assets that use our bank's service in a broader strategy to help augment their assets,” a SC official said.
Park's vision still values people amid the growing need to embrace digitalization, a top initiative of financial services firm.
Park's strategy is designed to strengthen retail business through digitalization, WM and increasing net interest margins (NIM), the difference between the rate a bank receives from loans and what it pays on deposits.