Reinforcing the Role of the No. 1 Bank through Change and Innovation

KB Kookmin Bank is one of the foremost leaders in the Korean banking industry, having maintained the top position for the last decade despite drastic changes both internally and externally.

Not satisfied with being the No. 1 Bank in Korea, KB Kookmin Bank aims to discover new growth engines and explore a brighter path for the future through consistent trials in development and innovation.

More than half of the Korean population, 26.46 million people, have personal accounts with KB Kookmin Bank, totaling 237.8 trillion won in 1,195 nationwide branch offices as of the end of March 2010.

The bank also possesses sound solvency in terms of risk management, even in deteriorating market conditions caused by the global credit crunch. Its 13.85 percent BIS Capital Adequacy Ratio and 11.07 percent Tier I ratio show how the bank is one of the most stable in the domestic industry, as well as possessing the lowest non-accrual loan ratio, with a Below BIS ratio of 1.29 percent and a default rate of 0.89 percent.

Upgraded credit ratings by international credit-rating agencies, ‘A1’ form Moody’s, ‘A’ from S&P, and ‘A+’ from Fitch, respectively, are a result of the bank’s stable financing structure and sales basis. In particular, S&P upgraded its credit rating outlook of the bank from negative to stable in March, while Moody’s rating rose from ‘A2’ to ‘A1’ on April 14, 2010. KB Kookmin Bank thereby became the only domestic commercial bank with credit rating from the three major international credit-rating agencies to be identical to those of the sovereign credit ratings of Korea.

Meanwhile, president and CEO Kang Chung-won was selected the ‘Best Employer in Korea 2009’ by Hewitt Associates, the world’s most prominent human resource and organization consulting company. Hewitt Associates had already selected the bank as one of the top ten best employers in Korea in 2007 due to its cohesive focus on employees in order to achieve high performance. The bank provides the best performing environment for its staff, resulting in these employees striving to create customer satisfaction and profit value.

In addition, college students considered the bank the second most preferred employer in 2010 due to its leading role in the industry and local community, being followed by Samsung Electrics, according to Incruit Corporation, an online job portal site.

It seems too audacious, however, for the bank to rest on its laurels and not make changes in its management paradigm, especially considering the recent dynamic circumstances in the financial market, such as the global credit crunch and the domestic policy pursuing a minimized level of separation between ‘Wall Street’ and ‘Main Street.’

As a result, KB Kookmin Bank will continue to support small-loan finance and small and medium-sized businesses by developing stable funding structures, with all of its employees practicing cost-cutting measures as part of the company’s everyday life.

KB Kookmin Bank has been paying thorough attention to the IBP (International Best Practice) since Kang Chung-won was appointed CEO, and the innovative movement of the organizational culture for the IBP became innovation of the organizational consciousness. The company promoted the second phase of the IBP in order to turn the crisis in the finance market into an opportunity for a new leap forward, with the core agenda of the IBP being “honesty, accuracy, promptness and courteousness.”

Kang called for employees’ to evolve in line with customer satisfaction, claiming “KB Kookmin Bank might see its prestige as the leading bank disappear unless our current banking services become even more preferable, proficient, and superior to our competitors,” during his inauguration. As such, ‘Customer Satisfaction, No. 1 Bank’ became the core goal of the bank and all its employees have dedicated themselves to achieving this.

As a result, the bank’s No. 1 position has been certified in various fields, such as being No. 1 in the National Costumer Satisfactory Index conducted by the Korea Productivity Center for four consecutive years, and finishing on top of the Korea Management Association Consulting’s Korea Costumer Satisfactory Index for three consecutive years.

KB Kookmin Bank is practicing social and ethical management as ‘a Global Bank Leading the Asian Financial Industry,’ based on the philosophy, ‘Social Contribution to Neighbors and Customers with Sincerity.’

Since the bank announced its ‘KB Kookmin Bank Social Contribution First Year’ initiative in 2006, it has continued to realize social contributions by establishing a ‘Department of Social Contribution Support’ for the first time in the banking industry, expanding and renovating its social contribution volunteer group, and reinforcing its social contribution infrastructure. The bank also pays special attention supporting juveniles for the future of Korea, especially in the fields of social welfare, disaster relief, and educational support.

Risk management is another sphere that KB Kookmin Bank leads in the domestic market, with its advanced risk management system, including SOD (Segregation of duties) and internal control system enabling the bank to become the first ‘Clean Bank’ in Korea.

In accordance with the new BIS agreement (BASEL II) as of 2008, the bank firmly established a risk management system to maximize its ability to manage various risks, being the first in the Korean market to be certified to utilize the Internal Ratings Based Approach (IRBA), as well as the IRBA for the credit rating model for conglomerates on July 24, 2008, and the Advanced Internal Ratings Based Approach for the Management Risk Measurement in November 2008.