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Industrial Bank of Korea Annual Report 12779.Pdf Annual Report 2017 IBK, Financial Partner for Better Future IBK, Financial Partner for Better Future Annual Report 2017 CONTENTS TotalTo Our Loans Stakeholders Total Deposits 01 Financial Highlights 04 Message from the CEO 08 Investment HighlightsKRW trillion KRW trillion 11 Our Stakeholders 182.1 201.7 18 News Highlights Management Review 21 Vision and Strategies 22 Board of Directors & Senior Management 24 Corporate Governance 26 Subsidiaries 28 Risk Management 32 Ethical Management 34 Corporate Social Responsibility 38 Financial Consumer Protection 40 Human Resources Credit43 RatingsIBK Co-up Financing Business Review 46 Corporate Banking 58 Retail Banking 70 Global Markets & Treasury 78 CorporateAa2 & Investment Banking AA- AA- FINANCIAL HIGHLIGHTS 84 New ChannelMOODY’S S&P FITCH Financial Review 93 Management’s Discussion and Analysis 97 Independent Auditor’s Report 98 Separate Financial Statements 104 Independent Auditor’s Report (based on consolidated financial statements) Net105 Income Consolidated Financial Statements NIM (Consolidated)110 Organizational Chart 112 Global Network & Contact Information KRW1,509 billions 1.94 % 03 IBK, Financial Partner for Better Future IBK is pioneering the future of finance. Our SME financing knowhow reflects 56 years of economic development in Korea, and based on our expertise, we are growing into a strong and secure partner for innovation and growth. We will expand our role in policy finance with ‘IBK Co-up Financing’ strategy which had been focused on financial support and solidify our place as a market friendly policy bank. Furthermore, we will strive to realize our vision of becoming Asia’s foremost SME financing bank as your financial partner for a better future. Financial Highlights Credit Ratings As of December 31, 2017 2015 2016 2017 Moody’s Aa2 Aa2 Aa2 S&P A+ AA- AA- Fitch AA- AA- AA- Key Financial Data (in billions of KRW, %) 2015 2016 2017 Net Income (Consolidated) 1,151 1,165 1,509 Total Assets 1 241,806 292,875 307,925 Total Loans ² 163,194 173,247 182,094 Total Deposits ³ 176,596 187,171 201,727 Total Shareholders’ Equity 16,770 17,422 19,005 ROA (Consolidated) 0.49 0.47 0.57 ROE (Consolidated) 6.92 6.53 7.97 BIS CAR 12.51 13.13 14.20 Substandard & Below Ratio 1.31 1.36 1.36 Net Interest Margin (%) 2015 2016 2017 NIM 1.91 1.91 1.94 * Note 1: Includes trust accounts * Note 2: Including foreign currency loans, based on total loans (excluding investments and receivables), card loans included in household loans * Note 3: Total Funding = Won-denominated Deposits + CDs + Cover Notes + Retail Funded RPs + SMIF + Foreign Deposits (excluding offshore foreign currency deposits) + Money Trusts Total Loans Total Deposits KRW182.1trillion KRW 201.7trillion Credit Ratings Aa2 AA- AA- FINANCIAL HIGHLIGHTS MOODY’S S&P FITCH Net Income NIM (Consolidated) KRW1,509 billions 1.94 % Message from the CEO Chairman & CEO Industrial Bank of Korea IBK Message from the CEO 05 ANNUAL REPORT 2017 Dear shareholders and customers, I would like to begin by expressing my appreciation for your unwavering support for IBK through the Total Loans years. (in trillions of KRW) The Korean economy saw its growth rate recover to the 3% level in 2017 despite difficult conditions. Likewise, IBK managed to overcome a challenging environment to produce healthy results and solid growth. 182.1 173.2 169.2 Backed by ongoing efforts to strengthen our inherent role of financing SMEs, IBK became the first in the Korean financial industry to see SME loans pass the KRW 140 trillion mark. We are working to offer creative solutions for SMEs through each phase of their growth cycle through our new platform “Partner in Finance”. Attesting to our principle of putting customer value first, we received the highest grade in a public 182.1 sector customer satisfaction survey and CCM (Customer-Centric Management) certification. '15 '16 '17 IBK saw balanced growth across its businesses in 2017 and net income surpassed KRW 1 trillion for the third consecutive year. On separate basis, net income increased by 28.0% to KRW 1,314.1 billion, alongside growth in non-interest income and USD 100 million in overseas income. On Net Income consolidated basis, it also climbed to a record high of KRW 1,508.5 billion. (in billions of KRW) Consolidated The solid performance would not have been possible without the steadfast encouragement from our customers and shareholders. 1,509 The global economy is on a recovery track, but growing protectionism and monetary tightening pose 1,165 a threat. The concurrent rise in oil prices, interest rates and the value of the Korean won is casting 1,151 clouds over Korea’s exports. The outlook is also uncertain on the domestic front. IBK has weathered economic crises in the past and emerged stronger by overcoming the challenges. Under the slogan of “Leaping Toward the Future with Our Customers,” we will carry out 1,509 the following key initiatives in 2018. '15 '16 '17 IBK Message from the CEO 06 ANNUAL REPORT 2017 Management Philosophy Strong and Solid: The management philosophy of IBK’s new CEO, Innovation Bank of Korea Kim Do-jin, is to make IBK “Strong and Solid: Innovation Bank of Korea”. Strong competitiveness This will be done by enhancing the competitiveness, · Strengthen SME financing solidifying the organization and pursuing change and innovation. · Diversify income sources · Enhance employee competency Solid organization · Manage based on principles · Focus on customer relations · Implement fair compensation Powerful innovation · Overcome old practice · Take on challenges · Produce practical results IBK Message from the CEO 07 ANNUAL REPORT 2017 First, we will reinforce the “IBK Co-up Financing” platform to spur SME-driven growth. NIM We will pursue rational growth, taking into account the increase of SME loans in the overall banking (%) sector. Moreover, we will promote start-ups and M&A involving SMEs through our “Partner in Finance” platform to spearhead innovative growth fueled by SMEs. 1.94 Second, we will take preemptive measures to ensure sound asset quality. 1.91 1.91 We will radically enhance our loan portfolio and strengthen capital management. In doing so, we will raise our BIS ratio to enable steady expansion of financial support. Third, we will raise the bar and aim higher. We will reinforce our profit-generating abilities and aim to grow net income to a new high. Along 1.94 with measures to drastically reduce loan loss provisions and bank-wide cost-cutting efforts, we '15 '16 '17 will pursue balanced growth of non-interest income and profits from overseas businesses and subsidiaries to diversify our earnings base. Fourth, we will spearhead change and innovation. We will step up IBK’s unique digital transformation, extend our global network and sharpen our competencies in wealth management to stand at the forefront of change and innovation. Fifth, our priority will be on the customers and frontline needs. As always, we will put priority on the customers and frontline needs in conducting our business activities and realign our sales organization accordingly. We will take steps to establish a world-class compliance scheme to proactively respond to increasing social demands and stringent regulations. IBK will make every effort to realize a strong and sturdy bank that serves as a partner in economic innovation and growth. On behalf of everyone at IBK, I ask for your continued support and extend my best wishes to you and your families. Thank you. Kim Do-jin Chairman & CEO Industrial Bank of Korea IBK Investment Highlights 08 ANNUAL REPORT 2017 1. Growth Investment Maintained No.1 market share in SME lending and sustained growth in loans Highlights · SME loan balance increased 5.9% year-on- year to KRW 142.4 trillion · Sustained growth with loans to profitable and IBK overcame an unstable global environment and stable SMEs difficult business conditions to achieve solid results IBK’s total loans in 2017 amounted to KRW and robust growth in 2017. 182.1 trillion, up 5.1% from the KRW 173.2 trillion posted at the end of 2016. SME loans, which accounted for 78.2% of total loans, in- Our net income rose to KRW 1,314.1 billion, based on separate financial statements. creased to KRW 142.4 trillion from KRW 134.4 The figure represents a remarkable increase of 27.9% over KRW 1,026.7 billion in trillion in 2016. Household loans went up 2.7% 2016. It reflects a rise in interest income driven by loan growth as well as an to KRW 31.9 trillion. With a market share of improvement in non-interest income such as fee income. Net income from 22.4% in SME lending, IBK maintained its subsidiaries also showed modest growth from KRW 238.8 billion in 2016 to dominant status as the only commercial bank KRW 245.4 billion in 2017. to record a market share exceeding 20%. IBK is pushing ahead with plans to grow into a strong, solid and innovative In 2018, IBK aims to continue leading the SME bank that acts as a partner in innovation and growth of the Korean economy. loan segment with its strategy of serving as a Although challenging domestic and global conditions are expected to persist in partner in financing. We will strengthen sup- 2018, IBK will continue its policy of supporting SME financing, proactively dealing port for early start-ups and mid-sized compa- with risk management, and securing a stable and long-term foundation for growth. nies by providing financial services customized We will boost assets through SME financing while satisfying capital regulations and to their growth stage. As a state-run bank that also focus on increasing net income from banking operations.
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