Top Five Banks Enjoy a 1.4 Trillion Won “Bonus Party” While People Struggle to Pay Interest on Their Loans

Kyunghyang Shinmun Archives

The top five commercial banks handed out bonuses amounting to nearly 1.4 trillion won last year after profits jumped due to soaring interest rates. On February 13, President Yoon Suk-yeol criticized the banks for having a “money party” and politicians followed by pointing out the banks’ excessive bonuses.

According to the information that Democratic Party of Korea lawmaker Hwang Un-ha received from the Financial Supervisory Service on February 14, the top five commercial banks--KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup--handed out bonuses amounting to 1.38 trillion won last year, up 35.6% from the previous year (1.19 trillion won).

NH Nonghyup handed out the most bonuses, recording 670.6 billion won, followed by KB Kookmin 204.4 billion won, Shinhan 187.8 billion won, Hana 163.9 billion won and Woori 155.6 billion won.

KB Kookmin Bank handed out the heftiest bonus per executive at 1.57 billion won. KB Bank was followed by Hana (358 million won); Shinhan (338 million won), Woori (326 million won), and NH Nonghyup (199 million won).

Woori Bank distributed the biggest bonus per employee at 172 million won, followed by NH Honghyup (75 million won), Shinhan (28 million won), Hana (25 million won) and KB Kookmin (23 million won).

Lawmaker Hwang said, “Due to soaring interest rates and inflation, the majority of the people are struggling with household debt and higher loan interest. In this situation, banks enjoyed an unprecedented ‘money party’ with their bonuses. They have abandoned public interest with such actions.”

Hwang asked, “Which citizen would consent to the banks having a bonus party instead of promoting financial services for co-prosperity with their record-breaking profits, when in the past public funds were injected to help banks overcome challenges due to the recession?”

Commercial banks handed out large bonuses to their employees because they achieved record-breaking net profits thanks to higher interest rates. Last year, KB Kookmin Bank earned a net profit of 2.99 trillion won, up 15.6% from the previous year, while Shinhan Bank earned 3.45 trillion won, up 22.1%. Hana Bank also earned 3.17 trillion won (up 23.3%) and the net profit of Woori Bank recorded 2.92 trillion won (up 22.9%).

This has not pleased the financial authorities, politicians and the public, but the banks think that financial authorities intervening in the bonuses of private companies is no different from state control. A document released by the Korea Federation of Banks last month stated, “Bank bonuses are determined freely by a labor-management agreement after considering various factors in addition to performance just like at other companies.”

Meanwhile, NH Nonghyup Bank gave an explanation on why it handed out the most bonuses among the five banks and said, “Our wage system is different from other banks, and our bank’s data on bonuses includes regular incentives other than the basic wage.” NH further said, “We inform you that the total wages at our bank including bonuses and incentives are lower than at other commercial banks.”