Yoon tells banks to share the wealth amid record profits
President Yoon Suk Yeol has ordered the government to come up with measures to ease the burden of households suffering from higher interest rates even as banks enjoy massive profits from the central banks’ aggressive monetary tightening.
“People are suffering a lot from the banks’ high interest rates,” President Yoon said during a senior secretary meeting Monday. “Banks serve the public interest, and as such, some of their profits should return to the people, self-employed and small business owners as a benefit of so-called ‘finance of co-existence.’”
“Banks should also use their profits to build up reserves against future financial market instability,” Yoon added.
The president’s public relations secretary Kim Eun-hye said Yoon ordered the Financial Services Commission (FSC) to come up with measures so that people feel no sense of discord due to the banks’ “money festival.”
The combined net profits of Korea’s four leading financial groups in 2022 amounted to 15.9 trillion won, a 9 percent increase year-on-year.
Shinhan Financial Group reported a record net profit of 4.6 trillion won last year, up 15.5 percent year-on-year.
KB Financial Group reported a net profit increase just 0.1 percent of 4.4 trillion won.
Hana Financial Group reported a net profit of 3.6 trillion won, a 2.8 percent year-on-year increase, while Woori Financial Group’s net profit surged 22.5 percent to 3.2 trillion won.
Last year’s strong performances were largely fueled by the interest rates hike.
Shinhan Bank saw its interest rates profit surge 16.3 percent, while KB Kookmin Bank saw a 20.2 percent increase.
Hana Bank’s interest profit increased 23.7 percent, and Woori Bank’s grew 25.3 percent.
To combat inflation, the Bank of Korea has been raising the benchmark interest rate since August 2021, when it raised it from a historic low of 0.5 percent to 0.75 percent.
As of January, the base rate was 3.5 percent, the highest it has been since 2008.
Banks have been using their windfall gains last year to give their regular employees bonuses between 300 and 400 percent of their base monthly salaries.
Banks also gave employees 300 percent bonuses in 2021.
Employees leaving the banks’ employ received hefty severance checks as well.
KB Kookmin Bank spent 272.5 billion won in the fourth quarter paying severance checks to 713 employees who took the company’s voluntary retirement deal. Each employee received an average of 380 million won.
Shinhan Bank spent 133.6 billion won on severance for 338 employees, meaning each person received 344 million won on average.
Hana Bank spent 163.7 billon won for 279 former employees, an average of 342 million won, while Woori spent 154.7 billion won for 349 former employees, an average of 440 million won.
“If banks seek excessive profits while ignoring their social role using their oligopoly position, the public and market will disregard them, making sustainable growth difficult in the long run,” said Financial Supervisory Service Governor Lee Bok-hyun last week.
President Yoon’s latest poll numbers have dropped amid public backlash over higher utility costs and the weakening economy, as well as over a political dispute within his own People Power Party.
According to a survey by Realmeter, Yoon’s support has dropped 2.4 percentage points from the previous week to 36.9 percent, while his disapproval rating surpassed 60 percent for the first time since November.
BY LEE HO-JEONG [firstname.lastname@example.org]