Hana Financial seeks further momentum from non-banking biz

After enjoying a prosperous 2017, South Korea’s financial players are now facing a challenging year ahead, amid escalating competition in the digital financing sector, government pressure on household debt control and incoming financial consumer law.

Hana Financial Group, the nation’s third-largest banking group in assets, is determined to hold ground and prolong its uptrend by maximizing the synergy between its banking and non-banking businesses.

It is also planning to expand financial support for small-sized enterprises as part of its mid-term vision to achieve a virtuous circle for the nation’s economy in general.

“The integration of Hana Bank and Korea Exchange Bank (in 2015) turned out to be a successful move in terms of the group’s business portfolio stability,” said an official.

“The improved efficiency of the integrated Hana KEB Bank has enabled Hana Financial to move onto reforming its non-banking affiliates such as securities, credit card and insurance, and widen the business horizon.”

The group confirmed earlier this month that it achieved a record-high 2.37 trillion won ($2.2 billion) in net profit last year, up 53.1 percent from a year earlier, surpassing the 2 trillion won mark for the first time.

Its return on assets climbed by 0.18 percent on-year to 0.6 percent and return on equity by 2.85 percent to 8.77 percent.

Its Banks for International Settlements capital ratio -- an index showing the capital soundness of a financial organization -- stood at 14.97 percent, up 0.64 percent from the previous year.

Growth was most conspicuous in the securities and credit card businesses. Hana Financial Investment recorded a 68.8 percent on-year growth, reaching 146.3 billion won in yearly net profit. Hana Card achieved 106.4 billion won in net profit, up 40.7 percent from a year earlier.

“Based on the improvement of our non-banking sectors and the consequent boosting effect on the group’s overall sales, we shall henceforth focus on integrating various functions into a single channel so as to provide comprehensive financial service to customers,” the official said.

As part of such goal, the group intends to increase the number of integrated stores that cover from banking functions, automotive financing, investment consultations to life insurance applications, according to the group.

Also, the group’s signature Hana KEB Bank is to collaborate with the securities’ investment bank sector under the shared slogan of “One IB,” seeking to scale up market share in real estate financing and merger and acquisition.

What empowers such internal synergy is the group’s forte in the digital realm, according to officials.

“Our digital financing function has long been our strongpoint in the market and will act as a key growth momentum in the long-term,” the official said.

Aiming at building a digital financial ecosystem, Hana Financial plans to further develop its Global Loyalty Network -- a program sharing membership benefits with partner companies such as Shilla Duty Free, Japan’s Mizho Bank, and US tech giant Oracle.

While realigning its conventional functions, the group will also seek to advance into new sectors through aggressive M&As. One of the priority goals is to buying into Hana UBS Asset Management by acquiring the 51 percent stakes currently held by UBS.

“Despite the recent gestures for interest rate hike, the current bank interests continue to remain in the low zone,” the official said.

“It is thus crucial to foster the asset management sector in order to appeal to profit-seeking financial consumers.”

In a pre-emptive action to check out on plausible overseas merger deals both in the banking and non-banking sectors, Chairman Kim Jung-tae made a three-day trip to Vietnam last month and met with local financial officials.

On the sidelines of its business momentum, the banking group will also focus on sharing its accomplishments with the rest of society and creating a virtuous economic circle, officials added.

Its plan is to insert some 15 trillion won into small-sized venture firms and job creation for the next three years, and to expand the range of loan products for the economically vulnerable clusters this year.

By Bae Hyun-jung (tellme@heraldcorp.com)