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The financial authorities check not only banks, but also insurance companies and credit card companies to see if their performance and compensation systems are appropriate. Its purpose is to check the soundness of financial companies that managed to break the record last year and increase dividends and the adequacy of consumer services.
It is understood that after President Yoon Seok-yeol and Financial Supervisory Service Governor Lee Bok-hyeon criticized the banking sector day after day, saying that excessive bonuses and the oligopoly system were a problem, pressure targets from the financial authorities expanding into other industries.
According to the financial sector on the 17th, the Financial Supervisory Service is currently examining whether the incentives of some insurance companies are excessive compared to their profits.
The five major non-life insurers posted a net profit of 4 trillion won last year. Samsung Fire & Marine Insurance, the number one company in the industry, posted 1.2837 trillion won in net profit last year, up 14.1 percent from the previous year. Meritz Fire & Marine recorded a record high, growing 29.4% to 854.8 billion won. DB Insurance (net profit of 997 billion won, 14.2% increase rate), Hyundai Insurance (574.6 billion won, 32.8%), and KB Insurance (557.7 billion won, 84.8%) were also good.
They paid or set performance bonuses of up to 60% of their annual salary or 550% of their monthly bonus. Total settlement dividends also increased by 60% from the previous year to KRW 1.36 trillion in total from Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, KB Insurance, and DB Insurance.
Among life insurers, Samsung Life Insurance posted a net profit of 1.72 trillion won, up 7.9 percent from the previous year, thanks to a reduction in corporate tax. The performance bonus is 23% of the annual salary. Shinhan Life’s net profit was KRW 463.6 billion, up 165% from the previous year.
An official from the financial authorities said, “Since uncertainty in the funding market has not been resolved, we would encourage all companies to make efforts to strengthen soundness.”
The Financial Supervisory Service also made a plan to check the performance system of credit card companies. Last year’s net profit for four credit card companies – Shinhan, Samsung, KB Kookmin, and Woori – was 1.8467 trillion won. On the 31st of last month, Samsung Card paid 50% of his annual salary as a performance bonus, and other card companies are expected to give similar or higher performance bonuses as last year. Dividends also increased from the previous year.
As market interest rates rose last year, credit card companies reduced customer service such as usage limits and raised the average interest rate on credit loans to the mid to high 10% range. Financial authorities plan to incentivize credit card companies to lower interest rates on credit card loans (long-term card loans), cash advances (short-term card loans), and revolving.
An official from the financial authorities said, “As market conditions improve (from last year), we are communicating with the industry so that loans can be normalized to the previous level.”
