[비즈한국] Woori Bank remains unable to escape its perennial fourth-place position among commercial banks. Former Woori Bank CEO Cho Byung-kyu stated last year that he would "achieve the top spot in net profit among commercial banks," but ultimately remained in fourth place. Although Jung Jin-wan took office as the new CEO of Woori Bank this year, there are no signs of moving up to third place. In fact, the net profit gap with third-place Hana Bank is only widening.
Woori Bank and Hana Bank have long competed for the third-place spot among commercial banks. In fact, the 2023 net profits for Woori Bank and Hana Bank were 2.515 trillion won and 3.4874 trillion won, respectively, showing a significant gap. However, as Woori Bank achieved remarkable results last year, the gap narrowed significantly. Woori Bank's net profit last year was 3.0469 trillion won, while Hana Bank's was 3.3686 trillion won.
It is reported that at the beginning of this year, there was internal optimism at Woori Bank about securing the third-place spot in commercial bank net profit. Coincidentally, both Woori Bank and Hana Bank welcomed new leaders this year. Woori Bank appointed Jung Jin-wan, former executive vice president of Woori Bank, and Hana Bank appointed Lee Ho-sung, former CEO of Hana Card, as their respective new CEOs. Both CEO Jung Jin-wan and CEO Lee Ho-sung began their terms on January 1 of this year. The newly appointed CEOs have effectively begun a race for the third-place spot among commercial banks.
The first quarter of this year was a complete victory for CEO Lee Ho-sung. Woori Bank’s consolidated net profit for the first quarter of this year was 635.2 billion won. This is a 19.79% decrease compared to Woori Bank's net profit of 792 billion won in the first quarter of last year. Hana Bank's net profit increased by 17.87%, from 845.8 billion won in the first quarter of last year to 997 billion won in the first quarter of this year. For Hana Bank, it was a case of killing two birds with one stone: improved performance and maintaining the third-place spot.
The winner of the second quarter was also CEO Lee Ho-sung. The second-quarter net profits of Woori Bank and Hana Bank were 916.7 billion won and 1.0966 trillion won, respectively. While Woori Bank performed relatively well compared to the first quarter, it still failed to catch up with Hana Bank. In fact, the gap is widening compared to last year.
Woori Bank's soundness indicators are also not as strong as those of other commercial banks. According to the Financial Supervisory Service, Woori Bank's Common Equity Tier 1 (CET1) ratio as of the end of June this year was 14.21%. This is lower than its competitors Hana Bank (16.49%), Shinhan Bank (15.57%), and Kookmin Bank (15.35%). It is even lower than the 14.90% average of the 20 domestic banks. CET1, calculated by dividing common equity capital by risk-weighted assets, is a key capital soundness indicator showing a financial institution's loss-absorption capacity.
It is not that CEO Jung Jin-wan has nothing to say. Woori Bank incurred one-time costs due to voluntary retirements in the first quarter of this year. According to the Financial Supervisory Service’s electronic disclosures, Woori Bank’s salary-related expenses increased from 536.5 billion won in the first quarter of last year to 716.2 billion won in the first quarter of this year. Furthermore, CEO Jung is placing more importance on restoring trust than on performance. During his time as a candidate last December, CEO Jung met with reporters and mentioned, "Since Woori Bank’s capital strength is weak, evaluations are conducted based on performance," adding that "evaluations should move toward customer satisfaction (rather than just performance)."
Nevertheless, if the gap between Woori Bank and Hana Bank continues to widen, it will inevitably affect the evaluation of CEO Jung Jin-wan. Given the gap in the first half of the year, it seems realistically difficult for Woori Bank to secure third place in net profit this year. CEO Jung Jin-wan’s term ends on December 31 of next year. For CEO Jung, next year is the final year to demonstrate his achievements. The financial sector is focusing on whether CEO Jung can gain the upper hand in his competition with CEO Lee Ho-sung next year.
The performance of Woori Bank has a significant impact on Woori Financial Group316140. Woori Bank accounts for approximately 90% of Woori Financial Group's net profit in the first half of this year. The net profits of Woori Financial Group and Hana Financial Group086790 last year were 3.1715 trillion won and 3.7685 trillion won, respectively. However, the gap has widened, with the first-half net profits for this year standing at 1.5943 trillion won for Woori Financial Group and 2.3232 trillion won for Hana Financial Group.
The term of Im Jong-yong, Chairman of Woori Financial Group, ends in March next year. Although Chairman Im has never officially mentioned seeking a consecutive term, rumors of his reappointment are circulating in the financial sector. However, if the performance gap between Woori Financial Group and Hana Financial Group continues to widen, his prospects for a consecutive term may not be smooth.
At the very least, Woori Financial Group’s recent acquisition of Tongyang Life Insurance and ABL Life Insurance offers the expectation of an increased non-banking portion starting in the second half of this year. From Woori Bank’s perspective, it can also look forward to synergies with Tongyang Life and ABL Life, potentially aiming for a rebound in performance in the second half. A representative for Woori Financial Group, while announcing the first-half results, expressed expectations for the acquisitions, stating, "Now that we have completed a comprehensive financial group by incorporating Tongyang Life and ABL Life in the second half, we expect to further strengthen the group's profit base through balanced growth in banking and non-banking sectors and full-scale synergy between subsidiaries."