Amount of 30 Largest Corporations’ In-House Reserves Sharply Increased

In recent years, the amount of internal reserves and land holdings of 30 largest conglomerates surged while their domestic investment shrank.

Park Kwang-soon, a lawmaker of the Minjoo Party and a member of the National Assembly's Planning and Finance Committee analyzed consolidated financial statements of the 30 largest companies. As a result, Park found that their average ratio of internal reserves to net profits of last fiscal year was 8,682%. The ratio which was 4,484% in 2014 increased about 100% in two years. An Internal reserve means the sum of retained earnings and capital surplus.

In particular, Samsung C&T's ratio of internal reserves to net profits was 85,207%, towering over those of other large corporations. Samsung C&T was followed by SK Telecom (42,270%), Samsung Fire & Marine Insurance (32,069%), Samsung Electronics (22,004%) and Dongbu Insurance (10,021%). The total amount of internal reserves of the 30 largest companies climbed to 652.381 trillion won (US$587 billion), up 150.579 billion won (US$135 million) from 2014 (501.801 trillion won or US$451 billion).

By company, Samsung Electronics overwhelmingly topped the list with 197.490 trillion won (US$177 billion), followed by Hyundai Motor (68.564 trillion won or US$61 billion), POSCO (42.571 trillion won or US$38 billion), Hyundai Mobis (28.925 trillion won or US$26 billion) and Kia Motors (25.026 trillion won or US$22 billion).

The total book value of land owned by these large corporations totaled 79.802 trillion won (US$71 billion), up 5.00 billion won (US$4.1 million) from 74.489 trillion won (US$67 billion) in 2014.

Hyundai Motor, which bought the site for Korea Electric Power Company’s headquarters building, had the largest amount of land with 11.788 trillion won (US$10.0 billion), followed by Lotte Shopping (8.043 trillion won or US$7.2 billion), Samsung Electronics (7.869 trillion won or US$7.0 billion), Hyundai Heavy Industries (6.872 trillion won or US$6.1 billion) and Kia Motors (4.912 trillion won or US$4.4 billion).

On the other hand, investment fell. Investment by the 30 largest companies last year stood at 415.896 trillion won (US$374 billion), down 12.744 trillion won (US$11.4 billion) from 2014 (428.640 trillion won or US$385.7 billion).