[비즈한국] JB Financial Group175330, which owns Kwangju Bank and Jeonbuk Bank, has recorded record-high earnings. JB Financial has adopted a strategy targeting niche markets, such as expanding collaborative products with internet-only banks and strengthening foreign-national financial services that traditional commercial banks are hesitant to enter. However, as asset soundness has deteriorated—with the delinquency rate exceeding 1% for the first time in two quarters—attention is now focused on its improvement strategy.
JB Financial Group achieved its highest net profit in history last year. On February 6, JB Financial announced that its 2024 net profit was 677.5 billion won, a 15.6% increase compared to the previous year. The strong performance was led by non-interest income. JB Financial's 2024 non-interest income reached 238.9 billion won, a 121% increase from the previous year (108.1 billion won). This was driven by a 141% surge in securities-related gains (from 74.8 billion won to 180.4 billion won). During the same period, interest income grew by 3.6% (from 1.9066 trillion won to 1.976 trillion won).
The annual net profits of major subsidiaries also all showed an upward trend. Kwangju Bank's net profit was 292.7 billion won, up 21.6% from the previous year; Jeonbuk Bank's was 221.2 billion won, up 8.2%; JB Woori Capital's was 223.9 billion won, up 19.4%; JB Asset Management's was 5.5 billion won, up 10.1%; and JB Investment's was 3.9 billion won, up 5.2%. Its grandson company, PPC Bank in Cambodia, also recorded a net profit of 38.3 billion won, a 12.2% increase year-on-year.
Unlike other financial holding companies, JB Financial has turned to collaboration with internet-only banks and financial services for foreign nationals as new growth engines. Kwangju Bank and Toss Bank saw significant benefits after launching "Together Loan" in August 2024, the financial industry's first joint loan product. This year, Jeonbuk Bank is preparing a joint loan with Kakao Bank, and the group expects profitability improvements from both products.
JB Financial Chairman Kim Ki-hong said during a conference call held on the 6th, "The scale of the joint loan between Kwangju Bank and Toss Bank reached the 300 billion won range in five months, and we expect it to exceed 500 billion won annually this year. If we include the joint loan between Jeonbuk Bank and Kakao Bank coming in the second half, we anticipate a scale in the 700 billion won range."
Previously, in the third quarter, Chairman Kim noted, "Initially, we were cautious due to concerns about delinquency rates or defaults, but because the default rate has been low so far, we view it as an important source of profit," adding, "We expect to sell between 500 billion won and a maximum of 1 trillion won in 2025."
The group is also expanding infrastructure for foreign-national finance. Kwangju Bank recently announced plans to establish a branch exclusively for foreign nationals at the Gwangju Foreign Resident Support Center. It will be more than twice the size of a standard branch and will introduce exclusive loan products for foreign nationals, with an opening scheduled for the end of February. On the 3rd, Kwangju Bank also introduced real-time interpretation and translation services for foreign nationals at all its branches.
Recently, it also launched a pilot service for "Bravo Korea," a financial app for foreigners residing in Korea, through Jeonbuk Bank. Given that Jeonbuk Bank has spent over six years dedicated to foreign-national finance—including handling exclusive loan products and operating the banking industry's first specialized financial center for foreigners—the group seems to be applying this model to Kwangju Bank as well.
The problem is that asset soundness has deteriorated despite the record-high performance. JB Financial's delinquency rate on loans in the fourth quarter of 2024 was 1.13%. After recording 1.17% in the first quarter, it had decreased to 0.86% in the third quarter, only to exceed 1% again. This stands in contrast to other regional financial holding companies such as BNK Financial (0.94%) and DGB Financial (0.62%), which maintained rates below 1%.
This appears to be due to the deterioration in the soundness of major subsidiaries. The fourth-quarter delinquency rate for JB Woori Capital was 2.37%, a 0.55 percentage point increase compared to the third quarter (1.82%). During the same period, Jeonbuk Bank's rate rose from 0.78% to 1.09%, and Kwangju Bank's from 0.58% to 0.70%.
JB Financial's non-performing loan (NPL) ratio, an indicator of asset soundness, was 0.91% in the fourth quarter, a 0.05 percentage point increase year-on-year. On the other hand, the NPL coverage ratio, which measures the ability to cover bad debts, was 138.0%, a 5.4 percentage point decrease from the same period last year. The amount of overdue loans in the fourth quarter was 577.8 billion won, a 27.6% increase from the same period last year (452.8 billion won). Oh Ji-min, a senior analyst at Korea Investors Service, stated, "Asset soundness indicators have been deteriorating since 2022," citing the increase in non-performing loans from Jeonbuk Bank's real estate PF loans and household loans for low-to-medium credit individuals, as well as the rising delinquency rate at JB Woori Capital, as the causes.
With the delinquency rate worsening again after just two quarters, the strengthening of financial services for foreign nationals also raises concerns. The reason general banks rarely handle credit loans for foreign nationals is the risk of being unable to recover loans if the individuals return to their home countries. Instead, loan products for foreigners carry high interest rates. Looking at Jeonbuk Bank’s products, interest rates start from the high 9% range and go up to the high 17% range.
JB Financial maintains that there are no issues with soundness management. A company official stated, "Because Jeonbuk Bank has provided foreign-national financial services for a long time, we have built up know-how and expertise. We are strengthening the business because we can guarantee a certain level of delinquency rate management. As the number of foreign workers continues to increase, we see it as a growth market," adding, "The rise in the fourth-quarter delinquency rate appears to be due to deterioration at some subsidiaries."