November 28, 2024

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Lee Hwan-ju, a sole candidate for next KB Kookmin Bank CEO (KB Financial Group)

KB Financial Group’s decision to name its insurance unit head as the next CEO of KB Kookmin Bank has shown its willingness to optimize synergies among pan-KB affiliates.

The CEO recommendation committee of KB Financial Group recommended that KB Life Insurance CEO Lee Hwan-ju lead KB Kookmin Bank on Wednesday.

“We recommended Lee as a final candidate who can stably pursue substantial growth and drive consistent improvement in corporate and shareholder value through structural improvement focusing on capital cost efficiency,” the committee said in a statement.

It is the first time a KB affiliate’s CEO has been named to the top post of the flagship banking unit.

"I will swiftly identify the bank's major pending issues and combine my long-term experience working at the bank and insurance company to make KB Kookmin Bank a trustworthy financial partner,” Lee told reporters Thursday.

The new CEO will officially assume the two-year term position in January next year following the general shareholders' meeting.

Having joined KB Kookmin Bank in 1991, Lee has held key positions in the group's banking, non-banking and holding company units.

His strong leadership stood out during the merger process between KB Life Insurance and Prudential Life Insurance of Korea, which KB Financial Group acquired in 2020. In 2023, KB Life logged a net profit of 256.2 billion won ($183.5 million), nearly double the combined net profit of KB Life and Prudential Life Insurance in the previous year.

Expanding the insurer’s business to the nursing care sector to discover new revenue sources in the aging society was considered one of Lee’s achievements during his tenure.

Daunting tasks lie ahead for Lee.

KB Kookmin Bank was usurped by its cross-town rival Shinhan Bank as Korea's top commercial bank in terms of a consolidated net profit of the first three quarters this year.

A turnaround is much needed for its loss-making Indonesian subsidiary, Bank KB Bukopin, which is often regarded as a poor investment decision that hurts KB’s profitability.

Banks’ falling net interest margins induced by interest rate declines and increased volatility in the global financial market are creating a challenging business environment for bankers.

“The business environment surrounding banks has become more uncertain and difficult than ever, and I feel a sense of responsibility rather than joy at taking on such an important role,” Lee said.

By Park Han-na (hnpark@heraldcorp.com)