Net Outflow
It was pointed out today by Rep. Kim Sang-min of the Saenuri Party, who is on the National Policy Committee of the National Assembly, that Chinese and Japanese banks in Korea posted US$430 million in net income last year, which is about triple the net income of Korean banks doing business in China and Japan.
There were 19 Korean banks doing business in China and Japan, and they earned only US$140 million. The proportion of added value of the Korean financial industry compared to Korea’s GDP dropped to 5.09 percent in 2014 from 5.88 percent in 2008. The percentage of Korean banks’ overseas branches stood at 2.9 percent at the end of 2014.
Unlike them, world-class banks earn up to 54.9 percent of net income abroad. For example, the Citi Group earned 54.9 percent abroad, while the Mitsubishi Group and HSBC earned 28.4 percent and 21.7 percent, respectively. It is analyzed that Korean financial institutions considerably slashed their overseas businesses and have been complacent with interest-oriented business since the 1997 financial crisis, widening the gap with Chinese and Japanese banks. This gave rise to a drop in the competitiveness of the Korean financial industry.
The international financial magazine “The Banker” ranked the Korea Development Bank 62nd, the KB Financial Group 65th, the Shinhan Financial Group 69th, the Hana Financial Group 82nd, Woori Bank 91st, and the NH Financial Group 97th in its World’s 1000 Best Banks based on the size of quality capital. No Korean banks ranked above 50th place.