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For this English version of our press release,
KCCI strives accurately to convey the contents of the original Korean text.
However, readers are advised to take into account the possibility of slight
differences in meaning incurred in the process of translation, including
omission or summarization of the original text for the convenience of readers
or some other reason. Reference to the Korean version is advisable for readers
who require additional accuracy of this detailed report. KCCI shall not be held
responsible for any difference in the shade of meaning or erroneous translation
between the Korean and English versions or for any adverse results that may occur.
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Survey on the ‘Business Conditions and Prospects of the Financial Industry in 201...
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2012-01-26
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Things are not looking very bright this year for the financial industry performance as it may become congested or rather reduced compared to the standards of last year.
The Korea Chamber of Commerce and Industry (Chairman Sohn, Kyung-shik) surveyed 250 domestic financial industries on the ‘Business Conditions and Prospects of the Financial Industry in 2012.’ According to the results of this survey, 48.8% of the respondents prospected that this year’s earnings ‘will recede compared to last year’s,’ while 26.8% of the respondents answered it will ‘be similar to last year’s earnings.’ <‘Slightly increase’ (24.4%)>
Reasons for having a negative outlook on the performance of the financial industries were chosen to be ‘global economic slowdown following the European Financial Crisis’ (55.7%) and ‘possibility of side effects following a surge in household debt’ (28.7%). <‘Side effects following a strengthening of financial regulation’(7.4%), ‘real estate business contraction following an insolvent real estate project financing’(5.7%), ‘intensified competition within the financial industry’(2.5%)>
According to prospects on the category of business types, 51.6% of the enterprises viewed performance of the card companies would be poor, followed by banking (16.4%), securities (12.0%), asset management (12.0%), and insurance (2.5%) companies.
The KCCI stated that “it seems in the new year, the European financial crisis will be unfavorable to the financial industries worldwide and heighten market instability,” and added concern that “in the case for card companies, the decrease in consumption as a result of a surge in household debt, and a formation of a social consensus about a reduction in the commission of credit card companies will have a negative impact on profit-making.”
Regarding the recovery of the financial market this year, 45.2% of the respondents’ outlook was ‘negative for the first half of the year, while being positive for the second half,’ while 26% said the outlooks for ‘both the first and second half are negative.’ This means seven out of ten companies were worried about a difficult first half of the year. <‘Difficult to predict because of severe fluctuations in the first and second half’ (16.4%), ‘First and second half both positive’ (8.0%), ‘first half positive, second half negative’ (4.4%)>.
As uncertainty grows, it has been shown that the financial industries’ asset management may move towards a more ‘stable’ direction. As promising investment assets, the majority of the industries chose gold and bank deposits (46.8%) and bonds (31.6%) as the safest, while stocks (14.4%) and real estate (3.8%) were relatively not chosen to be safe. <‘Derivatives’ (2.5%), ‘Foreign investment’ (0.9%)>
As means of strengthening financial industries’ competition, more than half of the respondents answered ‘enhancing asset quality’ (52.4%), followed by ‘developing advanced financial products and increasing the operating capacity’(19.6%), ‘increasing customer base’(9.2%), ‘enlarging financial institutions’(7.6%), and ‘governmental deregulation’(5.2%). < ‘securing outstanding workforce and implementing advanced management system’ (4.4%), ‘enhancing global competitiveness’ (1.6%)>
Jeon, Su-bong, Chief of KCCI research division I, said that “financial industries tendencies for safer investments is solidifying as the global economy’s slowdown becomes more apparent,” and emphasized that “we need the wisdom to be able to take a step forward with sensible investments and aggressive business strategies when the global financial industries are taking a step back.”
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