Korean Commercial Banks Drops In Productivity
Employee productivity at South Korea’s four chief commercial banks has severely tumbled last year contrary to the impressive earnings report released. This will send a cautionary indication that Korean banks would drop their competitiveness amongst the prompt vicissitudes in the financial industry with the development of online based financial institutes.
On Tuesday, Shinhan Bank displayed the utmost productivity per worker with its pre-provision earnings, amount for employee productivity, of 189 million won ($165,116) last year. Subsequently, KEB Hana Bank had 143 million won whilst Woori Bank had 138 million won and KB Kookmin Bank with 90 million won, According to a study by Maeil Business Newspaper.
The employee productivity of the four chief moneylenders that testified a 20 percent on-year jump in collective with net profit to 5.4 trillion won last year deteriorated harshly in relations with 2011 when that of Shinhan Bank had measured to 305 million won, Hana Bank 250 million won, Woori Bank 304 million won and KB Kookmin Bank 260 million won.
Their dwindling productivity is also in unambiguous distinction with foreign banks operating in Korea such as Industrial & Commercial Bank of China that documented 500 million won in yield before credit fine provisions, Hongkong & Shanghai Banking Corp. (HSBC) with 300 million won and BNP Paribas with 200 million won.
Several commercial spectators accused the failure to implement a performance-based salary structure for the shrill plunge in the banks’ employee productivity. The existent seniority-based wage payment charges a plentiful settlement to the banks where beyond half of their staffs are in administrative positions. This inconsistent amount of executives functions as a main factor that pulls down their work competence and efficiency.
The administration’s efforts to present a merit-based wage system to develop the financial sector are becoming stale amidst the political and social turbulence caused by the arraignment of former president Park Geun-hye and the impending constitutional election.
Financial professionals cautioned that commercial banks must require radical and major changes to live on in the increasing competition caused by the prevalence of various online based banks that has attracted more than anticipated curiosity from bank clients.
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Mia Carter | April 12, 2017