[THE INVESTOR] JB Financial Group, the sixth-largest financial group in the country, has appointed head of JB Asset Management Kim Ki-hong as its next chairman -- the first leadership change since 2013 after adopting a holding company structure.
While his three-year term has to be approved at a shareholders meeting in March, he met with a group of reporters to talk about his strategies for the group with 47 trillion won (US$41.68 billion) in assets. The following are excerpts from his media interaction.
Q. What is the future growth strategy for JB Financial?
Kim Ki-hong: Our assets have grown 300 percent in the past six years to 47 trillion won. This compares with a 100 percent growth of other local-based financial groups and an average of 36 percent by the four largest groups. There must be some fatigue due to the fast growth and the stock price couldn’t keep pace. Therefore, it’s time to focus on the quality of growth for a while rather than quantitative expansion. For instance, our status of assets is relatively weaker than other financial groups and equity capital rate also needs to increase.
Q. How do you see future competition with other financial groups?
Kim: The banking business takes up a high proportion of local financial groups and they lack uniqueness. It is forecast that the domestic environment might not be good in the coming years, which limits growth potential. So we need a special strategy.
We are mulling how to improve profitability from the non-banking sector such as capital and asset management businesses. The proportion of JB Financial’s non-banking sector is considered high with a very strong capital business. We look forward to expanding profits from the non-banking sector and will also contemplate how to create synergies with the banking sector.
For the banking sector, I think JB should maintain the two-bank system. Our financial industry prefers mega banks resulting in many mergers and acquisitions. That was to get rid of overlapping investments and to achieve economies of scale. But I wonder if banks have achieved their goals. Our banks are based in Jeonju and Gwangju. Because their bases are completely different, I think we should focus more on the respective regions with a unique corporate culture.
We are small but it is a challenge to compete directly with other financial groups although we have strong regional bases. We will strengthen our regional connections. We will also focus on customer demands which megabanks are not interested in. For instance, we will be more tuned in to the mid-range interest market.
JB Financial new chief Kim Ki-hong
JB Financial names new chairman
Q. Many banks are cutting the number of branches. What’s your strategy?
Kim: It is inevitable for all banks to see a decreasing demand for face-to-face services and an increase in online demand. While we will maintain our offline channels considering our regional bases, we will manage it with flexibility.
Q. Do you have any plans for M&As?
Kim: We will focus on staying small but strong. M&As happens when there are some deals in the market not because we have plans. If there are opportunities for businesses which we don’t have already, then we would of course consider. If the deal is good and cheap, there is no reason not to buy.
Q. What about plans for overseas expansion?
Kim: We have already established our base in Myanmar and Cambodia. Considering the potential growth in Southeast Asia, there could be a possibility of acquiring an overseas financial firm.
Q. What kinds of plans do you have for shareholder returns?
Kim: The dividend payout ratio of the four big financial groups has been about 20 percent to 26 percent in the last three years while we have 6 percent. We haven’t been able to pay out enough dividends due to the lack of capital strength but we will improve that ratio, eventually to about 20 percent, if possible.
We will carry out more shareholder friendly policies, for sure, but we won’t arbitrarily manipulate stock prices. We can’t be too sensitive about the stock price.
By Park Ga-young (email@example.com)