In the past five years, nearly 5,000 bank employees have left their jobs. This equates to about 1,000 employees resigning each year. Analysis suggests that the annual voluntary retirement program and the consolidation of offline branches have had a significant impact. Despite achieving record results each year, major commercial banks are expected to continue downsizing.
According to the Financial Supervisory Service's financial statistics information system on the 9th, the number of employees at the four major commercial banks (KB Kookmin, Shinhan, Hana, Woori) as of the end of September last year was 56,728, a decrease of 4,558 from 61,286 five years ago in September 2019. Compared to four years ago, there was a decrease of 3,863, indicating that nearly 1,000 bank employees have been reducing each year.
By bank, the number of employees at Kookmin Bank decreased the most in the past five years, by 1,523. Following that, Hana Bank saw a decline of 1,224, Shinhan Bank 977, and Woori Bank 834.
In a situation where mobile banking has established itself as the norm, workforce restructuring seems inevitable. Since the beginning of the year, major commercial banks have been implementing voluntary retirement programs, with Shinhan Bank expanding its criteria this year to include employees born in 1986 who are in their late 30s. An industry source noted that with expectations that voluntary retirement conditions will not improve from the current state, the number of retirees this year is likely to increase once again.
The decrease in bank employees is closely linked to the transition to non-face-to-face and digital finance. With branch consolidations continuing, 90 branches of the five major commercial banks have recently been closed within a month. As non-face-to-face services like mobile banking expand, there is a growing belief that it is no longer necessary to maintain physical branches despite high rental costs. While financial authorities are attempting to minimize branch consolidations directly, it is difficult to reverse the prevailing trend.
As the workforce continues to shrink, the representative productivity measure for banks, the cost-to-income ratio (CIR), is actually strengthening. The CIR indicates the proportion of operating expenses such as labor costs and rent to the total operating profit earned by banks, with lower figures signifying greater management efficiency. In the third quarter of last year, the CIR for the four major banks was around 38.8%, down from 45% two years ago in 2020, reflecting a steady decline.
As banks continue to downsize, the banking sector is expected to have recorded its highest performance ever last year. The net profit of the four major financial holding companies for the past year is estimated to be 16.7 trillion won.
An industry source said, "The reason for the improvement in the CIR is not solely due to reduced labor expenses, but also due to efficiencies in other expenses," adding that "most banks have set digitization and organizational slimming as management goals, so this trend is likely to continue for the foreseeable future."