South Korea bank shares slide amid political push to share profit (updated)

Shinhan Financial

16/02/2023 01:38

(Adds share prices, bank executive comment)
    By Choonsik Yoo
       SEOUL, Feb 16 (Reuters) - South Korea's biggest
financial groups saw their share prices fall on Thursday as
investors interpreted a call from the president to share more
profit with society as amounting to the strongest political
pressure in years.
    Such pressure is based on a lack of understanding of how the
financial industry works, banking executives told Reuters on
condition of anonymity for fear of adverse impact on employers.
    "The remarks show there is a strong perception in this
country that banks are public institutions and are based on a
lack of understanding about how banks operate," said the head of
a mid-sized lender.
    Shares of KB Financial Group Inc  105560.KS  and Shinhan
Financial Group Co Ltd  055550.KS  fell more than 1% in early
Thursday trade after their American depositary receipts plunged
more than 5% on Wednesday in New York.
    "The message from the government is that banks are making
increasing profit and need to do more for society," said Lee
Byung-gun, head of research at DB Financial Investment. "This is
not good for banking shares over the near term."
    President Yoon Suk-yeol, whose approval ratings have hovered
at around half of disapproval ratings in major opinion polls,
said on Wednesday lenders need to "voluntarily participate" in
sharing the pain of vulnerable people.  urn:newsml:reuters.com:*:nL1N34V06L
    Yoon's comment came after - but did not refer to - local
media reported in recent weeks that major banks paid hundreds of
thousands of dollars to employees for early retirement.
    A government statement, issued in relation to a meeting
where Yoon made the comment, showed banks' combined net profit
reached 18.9 trillion won ($14.68 billion) in 2022, versus 16.9
trillion won in 2021.
    ($1 = 1,287.3600 won)
 (Reporting by Choonsik Yoo; Editing by Stephen Coates and
Christopher Cushing)
 ((choonsik.yoo@thomsonreuters.com; +822 6936 1464;))