South Korea Commercial Banking Industry Update Quarter 4 2011

  • October 2014
  • -
  • Business Monitor International
  • -
  • 69 pages

Since Q108, we have numerically described the banking business environment for each of the countries surveyed by BMI. We do this through our Commercial Banking Business Environment Rating (CBBER), a measure that ensures we capture the latest quantitative information available. It also ensures consistency across all countries and between the inputs to the CBBER and the Insurance Business Environment Rating, which is likewise now a feature of our insurance reports. Like the Business Environment Ratings calculated by BMI for all the other markets on which it reports, the CBBER takes into account the limits of potential returns and the risks to the realisation of those returns. It is weighted 70% to the former and 30% to the latter.
The evaluation of the ‘Limits of potential returns’ includes industry elements that are specific to the banking market of the country in question and elements that relate to that country in general. Within the 70% of the CBBER that takes into account the ‘Limits of potential returns’, the industry elements have a 60% weighting and the country elements have a 40% weighting. The evaluation of the ‘Risks to realisation of returns’ also includes banking elements and country elements (specifically, BMI’s assessment of long-term country risk). However, within the 30% of the CBBER that take into account the risks, these elements are weighted 40% and 60%, respectively.
Further details on how we calculate the CBBER are provided at the end of this report. In general, though, three aspects need to be borne in mind in interpreting the CBBERs. The first is that the industry elements of the ‘Limits of potential returns’ are by far the most heavily weighted of the four elements. They account for 60% of 70% (or 42%) of the overall CBBER. Second, if the industry elements are significantly higher than the country elements of the ‘Limits of potential returns’, it usually implies that the banking segment is large and/or developed relative to the general wealth, stability and financial infrastructure of the country. Conversely, if the industry elements are significantly lower than the country elements, it usually means that the banking segment is small and/or underdeveloped relative to the general wealth, stability and financial infrastructure of the country. Third, within the ‘Risks to the realisation of returns’ category, the industry elements (ie: how regulations affect the development of the segment, how regulations affect competition within it, and Moody’s Investor Services’ ratings for local currency deposits) can be markedly different from BMI’s long-term risk rating.

Table Of Contents

Executive Summary 5
Data : Levels (KRWbn) . 5
Data : Levels (US$bn) .. 5
Data : Levels At June 2011 ... 5
Data : Annual Growth Rate Projections from 2011 to 2015 (%) ...... 6
Data : Ranking Out Of 59 Countries Reviewed In 2011 ....... 6
Data : Projected Levels (KRWbn). 6
Data : Projected Levels (US$bn) .. 6
Industry SWOT Analysis 7
South Korea Commercial Banking SWOT .... 7
South Korea Political Environment and Risk Analysis 7
Indonesia Economic Environment and Risk Analysis .. 8
Indonesia Business Environment SWOT ....... 9

Environment Overview Outlook .... 10
Commercial Banking Business Environment Ratings . 10
Data : Commercial Banking Business Environment Ratings ....... 10
Commercial Banking Business Environment Rating Methodology ...... 10
Data : Asia Commercial Banking Business Environment Ratings ....... 12
World Commercial Banking Outlook ... 13
Asia Banking Segment Outlook 17
Data : Banks’ Bond Portfolios .... 29
Data : Asia Commercial Banking Business Environment Ratings ....... 30
Data : Comparison Of Loan/Deposit, Loan/Asset And Loan/GDP Ratios ... 31
Data : Anticipated Developments In 2011f . 32
Data : Comparison Of Total Assets, Client Loans And Client Deposits, from 2009 to 2010 (US$bn) ..... 33
Data : Comparison Of Per Capita Deposits, 2010 (US$) ... 34
Data : Interbank Rates And Bond Yields, from 2010 to 2011 . 35
South Korea Banking Segment Outlook .. 36
Economic Outlook . 42
Data : South Korea Economic Activity, from 2008 to 2015 .... 44

Competitive Landscape 45
Market Structure ...... 45
Protagonists 45
Data : Protagonists In South Korean Commercial Banking Segment ..... 45
Definition Of The Commercial Banking Universe....... 45
List Of Banks ...... 46
Data : Korea Federation Of Banks Members ..... 46
Company Profiles .. 48
Shinhan Bank ...... 48
Data : Stock Industry Indicators ... 49
Data : Balance Sheet (KRWmn, unless stated) ... 49
Data : Balance Sheet (US$mn, unless stated) ..... 50
Data : Key Ratios (%) . 50
Woori Bank . 51
Data : Stock Industry Indicators ... 52
Data : Balance Sheet (KRWmn, unless stated) ... 52
Data : Balance Sheet (US$mn, unless stated) ..... 52
Data : Key Ratios (%) . 53
Hana Bank .. 54
Data : Key Statistics For Hana Bank from 2008 to 2010 (KRWmn) ....... 55
Korea Development Bank ... 56
Data : Balance Sheet (KRWmn).. 57
Data : Balance Sheet (US$mn) ... 57
Data : Key Ratios (%) . 57
Industrial Bank of Korea .... 58
Data : Stock Industry Indicators ... 59
Data : Balance Sheet (KRWmn, unless stated) ... 59
Data : Balance Sheet (US$mn, unless stated) ..... 59
Data : Key Ratios (%) . 60
KB Kookmin Bank ....... 61
Data : Stock Industry Indicators ... 62
Data : Balance Sheet (KRWmn, unless stated) ... 62
Data : Balance Sheet (US$mn, unless stated) ..... 63
Data : Key Ratios (%) . 63
Korea Exchange Bank 64
Data : Stock Industry Indicators ... 65
Data : Balance Sheet (KRWmn, unless stated) ... 65
Data : Balance Sheet (US$mn, unless stated) ..... 65
Data : Key Ratios (%) . 66
Busan Bank . 67
Data : Stock Industry Indicators ... 68
Data : Balance Sheet (KRWmn, unless stated) ... 68
Data : Balance Sheet (US$mn, unless stated) ..... 68
Data : Key Ratios (%) . 69
Daegu Bank 70
Data : Stock Industry Indicators ... 70
Data : Balance Sheet (KRWmn, unless stated) ... 71
Data : Balance Sheet (US$mn, unless stated) ..... 71
Data : Key Ratios (%) . 71
BMI Banking Segment Methodology 72
Commercial Bank Business Environment Rating 73
Data : Commercial Banking Business Environment Indicators And Rationale.... 74
Data : Weighting Of Indicators .. 75

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