Kookmin Bank has been maintaining its position as a leading bank in Korea for more than a decade in spite of rapidly changing internal and external environments
Kookmin Bank (KB) has been constantly pursuing change and innovation under the slogan of “a global bank leading the Asian financial industry.”
As of the end of June, 2012, Korea’s largest lender is reported to have 287.8 trillion won in assets and 27.27 million customers, or more than half of the country’s entire population. Furthermore, the lender is operating 1,177 branches and industry-leading mobile and Internet networks.
In the first half of 2012, KB recorded a net income of around 1.0 trillion won and a delinquency rate of 1.03%, down 0.03%p from the previous quarter. Observers see that such good performance is attributable to the bank’s ongoing innovation efforts to boost productivity and bring fundamental change to the way it does business while at the same time thoroughly managing risks.
CEO Min Byong-deok declared that the bank would seek, “Change Management, Deep Change Management,” to innovate the entire bank, ranging from employee mindset to business practices and systems, so that it can overcome pending challenges and ensure a stable and profitable growth amid market turbulence.
Deep Change Management is meaningful in that it is a bank-wide innovation effort not just to improve profits but also to push for fundamental change and support its customers, markets and the sound Korean financial industry by focusing more on customers.
The bank’s solid business network, customer base and stable financial structure are well recognized by top credit rating agencies such as Moody’s, S&P and Fitch, helping it to secure the highest credit rating among commercial banks.
In addition, KB is stepping up efforts to enhance international operations in order to create new profit sources, reaching beyond the already saturated domestic market, and grow into a true global player.
KB is considering making a foray into emerging markets such as China, India, Indonesia and Vietnam, areas which are expected to grow even further. The lender is also interested in emerging markets located in areas other than in Asia.
With such regions in mind, KB is planning to enhance localization by constantly trying to establish local offices, branches and subsidiaries and taking gradual steps to enter such markets in the form of equity investment, joint venture, and M&A.
As part of its expansion plan for 2011, KB opened a branch in Ho Chi Minh on June 23 and an office in Hanoi, Vietnam on October 21. In 2012, the bank established an office in Mumbai, India, as well as a branch in Osaka, Japan. With respect to China, it is pushing ahead with the addition of a branch in Beijing with a plan to convert Beijing’s presence into a local subsidiary in 2012 in consideration of local business conditions.
At the same time, KB is trying to offer retail banking services to a select set of developed markets where it stands a good chance of earning profits based on its high quality products, services and risk management skills.
However, the bank is also taking a longer-term, strategic view to expanding its operations overseas in light of increasing market uncertainty around the globe.
Specifically, the bank will refrain from pursuing M&A that involve a large amount of investment in the short-term and make proper M&A and equity investments in promising markets while continuing to work on new and existing networks.
KB is also planning to enhance its capabilities by nurturing global talent and put in place internal systems for transferring its core systems to overseas operations as part of its preparations for global expansion.
As of September, KB has a total of 13 overseas operations; 8 branches (New York, Guangzhou, Suzhou, Harbin, Tokyo, Oakland, Ho Chi Minh and Osaka), 3 local subsidiaries (London, Hong Kong and Cambodia) and 2 offices (Hanoi and Mumbai).