New bridge, a leading model for investment
Is fun to become a banking analyst in town. Yeah, I agree writing report is torture. but, when u suddenly find out an interesting company, then u know u learned. Thats a part of excitement as an analyst. Am so excited the success story of New Bridge in Korean First Bank. Why Malaysia dont have such an successful bank, hmm .. "may be the limitation of talents or ambitious" or "or too much political control". either way, the problems going to solve soon, because BNM has just started its deregulation practices. Put away my complaints about Malaysia environment, Now am only interested to diversify my investment risks which I learned from Korean First Bank.
New Bridge success story in Korea.
A miracle achievement. When New Bridge bought over a 51% controlling stake, its assets were KRW 26.8t and its loan to clients was only 44% or KRW11.8t. The worse than expected level was the result of the Asian financial crisis and was asymmetrical to Korea First Bank’s capital and human structure. With the change in management, the banks had aggressively sett its goal of: 1. Total assets of KRW40t with KWR25t loan to client and 2. 25% ROE before tax return to shareholders. All the targets were reached in 2004 before the divestment of its stake to Standard & Chartered.
A remarkable safe and growth model. The remarkable growth in assets where, as at end 2004, Korea First Bank surpassed its goal of reaching KRW 42t and loans of KRW31t. The CAGR growth over five year was 38% and Korean First Bank became the fastest growing bank (both in consumer and corporations) in 2002, 2003 and 2004 in Korea. While there was a remarkable growth in assets, the bank still held a flat staff level aided by the support of optimizing processes (likes, centralisation, automation and rationalization). The best measure of the success in productivity per employee was loan to client per employee, from KRW2.6b/staff in year 2001 to KRW7.8b/staff in year 2004, from the last place to the leading group among Korean banks.
As, growth increases risk, in particular competition is strong and economy at accelerated cycle. However, this is not the case at Korea First Bank. The bank’s growth came not from few large credits but came instead from hundreds of thousands of small loan; hence, the risk is not concentrated. The bank has avoided the credit card crisis which happened in early 2004, where LG Card had to be bailed out. The successful risk diversification strategy enabled the bank’s NPL ratio to consistently remain at 1.5% since 2001.
Its strong credit culture wis also thanks to its strict centralized credit decision process where decision are channelled through either one of two departments focussed on corporate loans d orconsumer loans: The corporate loans applies advanced risk analysis which allows them to avoid troubled SME loans as well as large corporate loan defaults. The consumer loans go though a screening process where there is an emphasis in statistical risk for the consumer market with the use of advanced modelling methodologies (which helped Korean First Bank to have the lowest default rate in credit cards and consumer loans.
The milestones of achievement
A market share in mortgage lending that grew from 1.5% to 11.7% in three years
The capability to process 15,000 mortgages per month without an increase in staff level
Consumer risk level that has consistently remained the lowest in Korea, thanks to the art risk models and processes
Renovated network and state of the art private banking business
Modern and centralized collection system
Increase in SME loans of 26.3% in 2004
In investment theory, it is important to diversify your risks. It is not a policy to favour return, instead, it is a policy to increase asset qualities. while the modern investment concept hardly to quantify asset quality, then, put your money into thousand of small invesment was not a bad choice.
New Bridge success story in Korea.
A miracle achievement. When New Bridge bought over a 51% controlling stake, its assets were KRW 26.8t and its loan to clients was only 44% or KRW11.8t. The worse than expected level was the result of the Asian financial crisis and was asymmetrical to Korea First Bank’s capital and human structure. With the change in management, the banks had aggressively sett its goal of: 1. Total assets of KRW40t with KWR25t loan to client and 2. 25% ROE before tax return to shareholders. All the targets were reached in 2004 before the divestment of its stake to Standard & Chartered.
A remarkable safe and growth model. The remarkable growth in assets where, as at end 2004, Korea First Bank surpassed its goal of reaching KRW 42t and loans of KRW31t. The CAGR growth over five year was 38% and Korean First Bank became the fastest growing bank (both in consumer and corporations) in 2002, 2003 and 2004 in Korea. While there was a remarkable growth in assets, the bank still held a flat staff level aided by the support of optimizing processes (likes, centralisation, automation and rationalization). The best measure of the success in productivity per employee was loan to client per employee, from KRW2.6b/staff in year 2001 to KRW7.8b/staff in year 2004, from the last place to the leading group among Korean banks.
As, growth increases risk, in particular competition is strong and economy at accelerated cycle. However, this is not the case at Korea First Bank. The bank’s growth came not from few large credits but came instead from hundreds of thousands of small loan; hence, the risk is not concentrated. The bank has avoided the credit card crisis which happened in early 2004, where LG Card had to be bailed out. The successful risk diversification strategy enabled the bank’s NPL ratio to consistently remain at 1.5% since 2001.
Its strong credit culture wis also thanks to its strict centralized credit decision process where decision are channelled through either one of two departments focussed on corporate loans d orconsumer loans: The corporate loans applies advanced risk analysis which allows them to avoid troubled SME loans as well as large corporate loan defaults. The consumer loans go though a screening process where there is an emphasis in statistical risk for the consumer market with the use of advanced modelling methodologies (which helped Korean First Bank to have the lowest default rate in credit cards and consumer loans.
The milestones of achievement
A market share in mortgage lending that grew from 1.5% to 11.7% in three years
The capability to process 15,000 mortgages per month without an increase in staff level
Consumer risk level that has consistently remained the lowest in Korea, thanks to the art risk models and processes
Renovated network and state of the art private banking business
Modern and centralized collection system
Increase in SME loans of 26.3% in 2004
In investment theory, it is important to diversify your risks. It is not a policy to favour return, instead, it is a policy to increase asset qualities. while the modern investment concept hardly to quantify asset quality, then, put your money into thousand of small invesment was not a bad choice.
posted by teamkurt | 12:14 AM
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