Hana Financial Group (president Kim Jong-yeol) announced on April 15 that it recorded the net profit of 389.5 billion won during 1Q 2011 on a K-IFRS basis. With the figure starting at slightly below the 400 billion won mark, the group is expecting that its annual net profit target of one trillion won will be easily met this year as it was in 2010.
In the first quarter of this year, the group's net interest margin amounted to 2.26%, bringing it over 758 billion won of interest income. Meanwhile, its service charge income reached 227.3 billion won during the period.
The high performance is attributed mainly to its limited exposure to economic cycle-sensitive segments. It is at the bottom of the list in terms of real estate project financing loan size and the reserve for dead loan is not hanging that heavy on it even amid the recent insolvency cases of some construction companies.
As of the end of March, Hana Financial Group’s entire assets were at 207 trillion won, 11 trillion up from a quarter earlier. The increase was derived mostly from the growth of low-risk household and corporate loans.
In the meantime, Hana Bank, one of the group’s major subsidiaries and affiliates, posted 405.6 billion won in net profit during the quarter, hitting the 400 billion won level for the first time ever since 1Q 2007. The bank’s sales strength has recovered itself, the interest and service charge incomes have been maintained above a certain level and the bad debts expense has been cut sharply to lead to the feat. In terms of asset quality, its non-performing loan ratio was limited to merely 1.57% and default rate to 0.6%, thanks to its conservative and strict stance on riskier sectors and delinquents.
Hana Daetoo Securities and Hana Capital, two of the other daughter companies, touched 24.8 billion and 11.7 billion, respectively in net profit in 1Q 2011. The former’s brokerage commission income and the interest income of its investment banking segment grew a lot while the latter continuing the momentum it made when it had swung to surplus last year.
Hana SK Card’s assets under management for the same period marked 5.3 trillion won, on the back of the synergy effect from its tie-up with SK Telecom and its new businesses, which are running on wheels these days. Lately, the credit card arm of the group has seen both of its membership and turnover swelling fast. Meanwhile, earlier this year, Hana Financial Group formed a strategic alliance with China Merchants Bank. At the signing ceremony held in Shenzhen, Hana chairman Kim Seung-yoo and China Merchants Bank governor Ma Wei Hua promised a comprehensive partnership and mutual equity participation.
“The Chinese bank has huge growth potentials in its local market and, on the back of this cooperation agreement, we will strive even more to become one of the leading banks of Asia and the 50 largest financial groups of the world by 2015,” said the Korean financier. The tie-up is somewhat different from what are commonly called strategic corporate alliances. That is to facilitate their longer-term and closer collaboration by means of two-way equity participation and so forth. Its ultimate objective is to lead them to work together more effectively and efficiently down the road. The alliance covers corporate and retail financing, private banking, international finance, foreign exchange, investment banking, credit card and personnel exchange, too. “This partnership is a very important piece of the puzzle for us to open up the Chinese financial market in the long term,” added the company.