Pedestrians cross a street in South Korea`s financial district of Yeouido in western Seoul (Yonhap)
Employees at South Korean financial firms will receive up to four times their monthly salary as their bonuses for 2021, backed by booming business, sources said Sunday.
Woori Bank, one of the major commercial lenders here, has recently agreed with its union to hand its employees performance bonuses worth 300 percent of their monthly salaries plus some 1 million won ($830), according to industry sources.
The nation’s No.1 commercial bank by performance, KB Kookmin Bank and its long-time rival Shinhan Bank both decided to hand its employees bonuses equivalent to 300 percent of their monthly earnings. On top of that, Shinhan gave away credit card points worth some 1 million won that can be used as cash.
Hana Bank is expected to hand out a similar level of bonuses to its employees as well.
The employees at the banks are projected to receive around some 25 million won in bonuses based on the average annual salary of four major banks here – KB Kookmin, Shinhan, Hana and Woori – which ranged from an average 75 million won to 79 million won, exempting bonuses, in 2020, according to industry data. Employees at state-run banks received slightly less, earning an annual salary of an average 65 million won in the cited period.
For insurers, conglomerate Samsung’s key insurance arms Samsung Life and Samsung Fire & Marine Insurance have already handed out employees 17 percent and 36 percent of their annual salaries as bonuses, sources said. Meritz Fire & Marine Insurance, a top-tier insurer here, is forecast to hand out over 40 percent of its employees’ annual earnings as bonuses. The average annual base salary of Korean insurers stands at some 30 million won, but its employees tend to earn more on incentives.
Some brokerages, buoyed by blockbuster initial public offerings last year, including KakaoBank and Krafton, has already handed out up to 50 percent of their annual salaries as bonuses, sources said. Certain employees received up to 100 million won as bonuses, they added.
The bonus handouts come as the four major banking groups here – KB, Shinhan, Hana and Woori – are forecast to see yet another year of record profits for 2021. They have yet to officially announce their annual performance, but their combined net profit is projected to amount to a historic 14.5 trillion won according to FnGuide, a financial information company. The figure is 33.3 percent higher than the previous year. KB Financial Group, the nation’s top banking group by total assets, logged 3.7 trillion won in net profit in the January-September period last year and is expected to exceed 4 trillion won for the entire 2021.
Despite the ongoing festivities, financial authorities have warned the financial sector to brace for uncertainties stemming from higher interest rate and possible debt defaults. The Bank of Korea last month raised its benchmark seven-day repo rate by a quarter percentage point to 1.25 percent, bringing the rate back to a pre-pandemic level maintained before March 2020. The central bank slashed the rate by 0.5 percentage point to 0.75 percent and further down to 0.5 percent two months later to cushion the economy from pandemic woes.
With the mood of record-low interest rates having pushed people towards borrowing, banks‘ household loans here gained 71.8 trillion won for all of 2021, the third-largest gain ever.
“At the moment, all financial firms must focus on building the capacity to deal with possible future losses stemming from existing uncertainties,” Financial Services Commission Chairman Koh Seung-beom said last month.