Best bank: KakaoBank
In 2023, Korean banks faced a perfect storm, grappling with regulatory pressure to lower interest margins while facing intense profitability hurdles. In addition, the country’s largest banks found themselves embroiled in a scandal around the mis-selling of equity-linked securities that had resulted in substantial losses for consumers.
Against this difficult backdrop, KakaoBank, the country’s preeminent digital bank, wins the award for Korea’s best bank. KakaoBank has deftly charted an alternative course, aligning itself with the regulator’s objectives.
By focusing on mortgage refinancing and extending lower interest rates, KakaoBank has attracted customers from rival banks and its total loan portfolio grew by an impressive 39%, last year while its customer base expanded by 2.4 million.
Even in the face of contracting net interest margins, KakaoBank’s annual interest income grew by an astonishing 58.3% year on year to W2.04 trillion ($1.49 billion). The bank’s operating profit soared to W478.5 billion, marking a 35% increase from the previous year.
Best investment bank: Citi
Citi secures the award for Korea’s best investment bank in recognition of its comprehensive range of activity across M&A advisory, debt capital markets and equity capital markets.
In 2023, Citi dominated the Korean M&A market, advising on four transactions, three of which had a deal value exceeding $2 billion. The bank’s most notable deal was the merger of biosimilar company Celltrion and its distributor Celltrion Healthcare, the largest M&A transaction in Korea and the third-largest in the Asia-Pacific region in 2023. Citi acted as a co-adviser and supported the Celltrion group in highlighting the upsides to investors through active investor relations activities and roadshows in Japan, Singapore, Hong Kong and the US, resulting in a minimized buy-back volume for dissenting shareholders’ stakes.
Citi also demonstrated its prowess in the $400 million sale of a 45% stake in ISC, a Korean global leader in silicone rubber sockets for semiconductor testing, to SKC, capitalizing on the favourable industry outlook and ISC’s robust market standing.
Citi also served as the exclusive financial adviser to Medit, a leading global digital dentistry solutions provider, in its $2.0 billion sale to MBK Partners, marking the largest-ever medtech M&A deal in Asia (ex-Japan). Citi’s targeted approach and comprehensive due diligence facilitation enabled a successful transaction for all parties involved.
In the equity capital markets, Citi acted as sole or joint bookrunner in numerous transactions. Notable deals include the $465 million block trade of Coupang, the $403 million block trade of HYBE, and LG Chem’s $2.0 billion exchangeable bond offering.
Best international bank: Citi
Citi saw impressive growth over 2023 with revenue growth of 16% year on year.
One notable transaction was a syndicated loan agreement with HanaMicron in February 2023 to support international investments for semiconductor back-end processes. As the sole coordinator, Citi worked with the Korea Trade Insurance Corporation (K-Sure) to provide the $200 million syndicated facility.
Additionally, the bank launched a digital forum for its corporate clients where it shared insights on the digital market and presented overseas business opportunities to Korea’s leading digital companies during the Korea Digital Leaders’ Summit 2023.
Best digital bank: KakaoBank
KakaoBank introduced two new products in 2023 and reported impressive growth across its digital banking business. Deposit and loan balances grew by 42% and 39% year on year respectively, while its customer base grew by 12% to reach a total of 22.84 million customers.
Its one-month savings product was launched in the third quarter, followed by the launch of the banks digital credit loan comparison service in December 2023.
The bank also established an artificial intelligence lab at Digital Realty’s Seoul ICN10 data centre to fast-track its AI-powered service enhancements, such as personalized content.
Best bank for SMEs: Industrial Bank of Korea
Industrial Bank of Korea’s small and medium-sized enterprise banking business saw impressive growth over 2023.
It introduced the M&A Center, an online platform for SME M&A. During the year, 532 companies received M&A advice using this platform and the branch network. To support its initiative Industrial Bank of Korea published and distributed 625 copies of the M&A guide to all its domestic branches.
The bank also has an IBK Consulting Centre. This initiative provides free consulting services for SMEs, covering all aspects of the business lifecycle. In 2023, 4,682 consultations were conducted including 1,665 face-to-face meetings. This represented an increase of 25.7% since its launch in 2019.
The bank’s SME loans business grew to W232.2 trillion ($167 billion) in 2023, accounting for 80% of the W286.8 trillion loan book.
Best bank for ESG: ING
ING Korea had a busy 2023 in sustainable banking. It closed several sustainability linked deals, organized and took part in several sustainable finance events and launched new sustainability linked products.
The Dutch bank worked on a $48.3 million sustainability linked loan with the transport and logistics shipping firm HMM South Korea and acted as the green loan coordinator for the W440 billion ($317 million) green loan to Digital Edge in South Korea. It also acted as sole social coordinator for a social asset-backed securities deal worth $400 billion.
As part of an effort to evolve the sustainable finance sector, ING Korea organized the Sustainable Finance event in Songdo, Incheon in May 2023. The event showcased the bank’s net-zero journey and sustainable finance market capabilities. In addition, ING presented at the Korean Financial Supervisory Service (FSS) conference on green taxonomy and the FSS Climate Risk Symposium on transition planning to a low carbon economy.
ING Korea has also worked with clients to introduce sustainable strategies and initiatives. This includes its client transition plans, which map clients’ decarbonization pathways using digital tools. It has also launched the ING Sustainable Finance Asia Pacific newsletter, which promotes sustainable finance conversations among its clients and employees.
Best bank for diversity and inclusion: Industrial Bank of Korea
Industrial Bank of Korea launched a host of initiatives to bolster diversity and inclusion in Korea in 2023. The focus of these efforts was to provide support for socio-economic shocks and to help low-income families in the country.
The bank expanded its Workers’ Livelihood Stabilization Loan programme in 2023. This provides funds to employees who need a large sum of money in an emergency, such as a wage reduction or non-payment of wages, and to those who are irregular workers undergoing vocational training. As of 2023, a total of W291 billion ($210 million) was provided to 35,699 beneficiaries.
A total of W1,087 billion was provided to 120,159 individuals in the microfinance sector.
The IBK foundation continued its support to individual customers with low incomes or low credit worthiness who face difficulties accessing traditional financial services. To date, the foundation has offered a total of W62.5 billion to 26,541 beneficiaries.
Gender diversity in the workplace is another focus. “Gender diversity is not an option but indispensable, which is a matter of equality,” chief executive Kim Sung-tae commented on inclusion at the bank in Bloomberg’s 2023 Gender-Equality Index.
Best bank for corporates: Hana Bank
Hana Bank accounted for 13% of system loans and 15% of system deposits in South Korea by the end of 2023. The bank enjoys a strong domestic franchise, particularly in corporate banking, which has driven a sustained improvement in profitability despite the challenging economic backdrop.
The bank experienced moderate loan growth in 2023 while keeping costs contained. Corporate loans outstanding grew by W17.2 trillion ($12.4 billion) in 2023, reflecting W6.2 trillion year-on-year growth in large corporate loans and W12.5 trillion year-on-year growth in small and medium-sized enterprise loans.
The bank has shifted its lending business towards more secured and granular loans, and the portfolio has a high proportion of secured local-currency loans (80%). The ratio of non-performing loans stands at 0.4% with a common equity tier-1 ratio of 15.6%.
Like most banks in Korea, Hana has faced the impact of a sharp real-estate downturn in the country, but analysts at Fitch believe that the property downturn will not add much asset-quality pressure on banks.
On the retail side, Hana has been one of the first to compensate retail investors for losses on equity-linked securities following widespread mis-selling.
The bank signed an agreement with US-based digital asset custody firm BitGo in 2023 to jointly launch a crypto-asset custody business in the second half of 2024. It also signed a partnership with the Saudi Export-Import Bank in 2023 to expand its presence in the Middle East, with the aim of supporting Korean companies in the region.
