By Kim Jae-won
Staff reporter
The Industrial Bank of Korea (IBK) has been committed to bolstering small- and medium-sized enterprises (SMEs) since its establishment in 1961. The state-run lender now seeks to emerge as a leading financial services group providing a comprehensive range of financial services to individual customers.
IBK has helped many small firms weather economic crises over the past decades ― it extended 58 percent of its total loans to SMEs last year, while other banks were hesitant to provide loans to them. IBK overcame the lingering effects of the financial crisis backed by its preemptive risk management in 2009. Despite the high amount of loan products offered, its risk management system was able to operate efficiently.
Its delinquency rate dropped 35 basis points to 0.5 percent at the time. Interest income also climbed 13.2 percent year-on-year achieving both soundness and profitability.
The government-controlled bank declared its intention to overhaul its portfolio and profit structure by entering the retail banking market. The bank aims to extend its portion of retail banking up to 40 percent eventually. To achieve the goal, IBK has sought to attract retail customers providing better conditions compared to other commercial banks.
"Customers still do not know much about our retail products. We do our best to let them know our services, which are more competitive than our rivals," an executive of the lender said.
IBK said in April that its first-quarter earnings jumped almost eight-fold from a year earlier on improving lending margins. Net profit amounted to 376.5 billion won ($365 million) in the January-March period, up 686.6 percent from the previous year, the lender said in a regulatory filing. The figure gained 63.8 percent from three months earlier.
Sales, however, fell 37.9 percent on-year to 4.76 trillion won, while operating profit soared 785 percent to 481.7 billion won, it added. IBK's NIM, a key gauge of profitability, reached 2.78 percent in the first quarter, up from 2.63 percent three months earlier.
Yun Yong-ro, chairman & CEO of the lender, did not hide his ambition to make the lender a leading bank in Asia.
"We moved closer to our dream of becoming the best financial group in Korea," the former government official said at the lender's 2009 annual report. "IBK is on track to become a leading bank in Asia, following a corporate philosophy that places customer happiness as our highest priority."