Experts predicted that growing expectations for an imminent rate hike and corporate revamp moves, coupled with economic uncertainty at home and abroad, would make it difficult for local banks to post solid earnings during the remainder of the year.
"The deciding factor for this year's performance lies in how to manage financial health as well as profits in the midst of market uncertainties," said Kang Chung-won, president for the bank, in a monthly speech to employees.
Kang said the need to boost the bank's profitability and asset soundness is growing as uneasiness stemming from Europe's debt problems has yet to abate, and the corporate overhaul and a rate increase could jack up possible loan losses.
A rate hike helps improve a bank's net interest margin, a gauge of a lender's profitability, but it also could increase the amount of sour loans as more borrowers would feel pinched to service debt.
Kang's remarks came a week after a group of South Korean banks announced a plan to revamp cash-strapped companies. Local creditor banks plan to overhaul a total of 65 ailing companies in order to prevent potential defaults from undermining the nation's faster-than-expected economic recovery.
Kang, meanwhile, stressed the importance of improving managerial efficiency. The bank recently reorganized its branch network in a bid to efficiently provide private and corporate banking services.
The bank saw its first-quarter earnings more than triple to 520.3 billion won (US$427.5 million) from the previous year. / Yonhap News
reporter
Park Sae-jin
swatchsjp@ajunews.com