Banks are facing challenges with declining profitability overseas due to stricter regulations.

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 👀 Today’s Email about:

• Banks are facing challenges with declining profitability overseas due to stricter regulations.

• By 2072, nearly half of Korea's population is expected to be elderly.

• K-Pop idols made a major impact during Milan Fashion Week.

NEWS 📰

Banks are facing challenges with declining profitability overseas due to stricter regulations.

Korea's commercial banks are grappling with declining profitability abroad, largely due to challenges in Southeast Asia, where many have been expanding their presence. The region's central banks have been raising benchmark interest rates, which in turn have increased the cost of capital for Korean lenders. As a result, major banks like KB Kookmin, Shinhan, Hana, and Woori have reported significant declines in overseas earnings, leading them to depend more heavily on domestic interest income, often criticized as "windfall profits."

In the first half of 2024, the combined net profit from overseas operations for the four largest lenders fell by 38.1% compared to the same period in 2023. One notable factor is Indonesia, where a key interest rate hike from 5.75% to 6.25% has impacted profitability. For instance, Woori Bank's corporate branch in Indonesia, responsible for over half of the bank's overseas earnings, saw a 10.5% decline in net profit.

Adding to the strain are increased loan loss reserves, set aside to cover potential unpaid debts due to economic uncertainties in the countries where these banks operate. Additionally, regulatory hurdles in these regions have delayed expansion plans, further hindering growth.

As a result, overseas profits made up only 4.8% of the banks' total earnings in the first half of 2024. With the underperformance abroad, these banks are relying more on domestic income, which has fueled criticism over profiting from high interest rates in Korea without actively driving business growth. Industry observers caution that continued overseas struggles may exacerbate the ongoing debate over these so-called windfall profits.

By 2072, nearly half Korea's population is expected to be elderly.

By 2072, nearly half of South Korea's population is expected to be senior citizens, marking a dramatic demographic shift driven by the country’s low birthrate and rapid aging. According to data from Statistics Korea, the proportion of Koreans aged 65 and older will rise to 47.7% by 2072, compared to just 19.2% in 2024. This would place South Korea among the most aged societies globally, ranking third behind Hong Kong (58.5%) and Puerto Rico (50.8%).

Korea’s population is also projected to shrink significantly, decreasing by 30.8% to 36 million by 2072, down from the current 52 million. Meanwhile, the global population is expected to rise, reaching 10.22 billion in 2072 from the current 8.16 billion.

The country’s young population, those aged 0 to 14, will also decline sharply, making up only 6.6% of the total population in 2072, down from 10.6% in 2024. This drop reflects Korea’s low birth rate, which hit a global low of 0.72 children per woman in 2023. Although this rate is projected to rise slightly to 1.08 by 2072, it will still be among the lowest in the world.

As a result, Korea’s working-age population (those aged 15 to 64) will decrease from 70.2% in 2024 to 45.8% by 2072. This demographic imbalance will place significant pressure on younger generations, as the population dependency ratio (the number of non-working dependents relative to the working-age population) is projected to more than double, from 42.5 in 2024 to 118.5 in 2072.

North Korea is also expected to experience a population decline. Its population is forecast to peak at 26 million in 2024 and fall to 23 million by 2072. Even if the two Koreas were to unite, their combined population would still decrease from 78 million in 2024 to 59 million in 2072, indicating an inevitable population decline despite potential reunification.

ENTERTAINMENT 🌄

K-pop idols made a major impact during Milan Fashion Week.

K-pop idols are indeed becoming major players in the global fashion industry. With their influence transcending music, they’re now staples at prestigious fashion events, marking a new era of cultural crossover between K-pop and high fashion. It's impressive to see stars like BTS' Jin, Stray Kids' Hyunjin, and Twice's Dahyun making waves at Milan Fashion Week and beyond. This trend further cements K-pop's global reach and influence.

Travel Guide and The Best Way to Enjoy Korea

Korea is set to open the nation's longest walking trail.👇️ 

Korea is set to fully open its longest walking trail, the Korea Dulle Trail, on Monday, marking a milestone in the country's efforts to promote local tourism. Spanning 4,500 kilometers, the trail circles Korea’s coastlines and extends into border areas near the Demilitarized Zone (DMZ) that separates the two Koreas.

Development of the trail began in 2009, led by the Ministry of Culture, Sports and Tourism in collaboration with various other ministries, including the ministries of interior, defense, and unification. With the recent completion of the DMZ Peace Trail, the last section, the entire route is now open to the public.

A celebratory ceremony will take place at the Goseong Unification Observatory, the northernmost point on the trail. Yong Ho-seong, the first vice minister of culture, sports, and tourism, emphasized the government's aim to establish the Korea Dulle Trail as a major tourist destination, potentially on par with famous walking trails around the world.

Further details about the trail can be found on the Durunubi website (www.durunubi.kr) and the Durunubi mobile app.

If you want to get more updates: unravelkorea.com.

If you are confused about what to eat in Korea, then check it out 👇️ 

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