Kyongnam Bank has come to the aid of Southeast Asian tsunami victims. Effective January 5, 2005, the bank decided to waive fees on salaries and other earnings that workers from 11 countries struck by tsunami in 2004 remit to their relatives. Also fees are waived for relief funds that are contributed to the affected countries by individuals or organizations. Foreign exchange fees were also halved in aid to the tsunami victims.

Furthermore, the bank has kicked off a donation campaign for tsunami victims in Southeast Asia in cooperation with the Gyeongnam Chapter of the Korea Red Cross. Kyongnam Bank and other banks have raised a total of 3.1 billion won in aid for the tsunami victims. Executive Vice President Su-Byom Lee of Kyongnam Bank observed it is a tragedy that many people lost their lives and homes in the tsunami disaster, and hoped that people around the world would demonstrate compassion for the tsunami victims.

Based on its strengthened credit rating, Kyongnam Bank successfully issued financial bonds valued at 100 billion won in late 2004. These bonds with a one-year maturity are repayable at a rate of 3.46%. The bank has been in the black for three years running, while pursuing a future-oriented management strategy on the strength of its stable and solid asset structure. The new fund will be a source of lending for promising small and mediumsize enterprises and individual customers. Kyongnam is the first regional bank to float financial bonds.

In June 2004, a leading domestic credit rating agency applied an AA rating to the bank, the highest credit rating for any regional bank, with a focus on its financial structure, profitability and growth potential. Kyongnam Bank also became the first regional bank to commence asset trust business, which will enable it to multiply its sources of earnings. The bank works diligently to meet the varied needs of customers, along with its project financing and ABS (Asset-backed securities) services.

The bank¡¯s customer-appreciation loan program was conferred a special financial award by Korea¡¯s leading business journal, Maeil Business Newspaper. The bank had experienced serious difficulties in the wake of the financial crisis that hit Korea in 1997-98. Many of our customers suffered financial losses from the plight. But most customers of Gyeongnam and Ulsan stood firmly behind the bank during the lean years. This is the way the bank came up with the ¡°Premium Loans for Loyal Customers of Gyeongnam and Ulsan¡± in November 2004.

Interest on this loan is waived for the first month, along with mortgaging expenses. The bank orginally planned to provide 100 billion won as the special loan. At the end of 2004, however, the special loan outstanding aggregated to 160 nillion won, since it has attracted keen interest from our customers in South Gyeongsang Province and Ulsan City. The ¡°Good Start Home Loan,¡± introduced in early 2005, has also proved highly popular. A total of 34.3 billion won was extended to individual customers barely 18 days after the new lending program was commenced.

Kyongnam Bank opened an independent VIP Customer Center at its Head Office in an effort to attract more wealthy customers in January 2005. The center, staffed by four personnel, will offer a range of services on banking, taxes and real estate holdings. A VIP Center was previously affiliated with the headquarters¡¯ business unit. A marketing officer of the bank said that in order to compete with commercial banks based in Seoul, it is necessary to have an outstanding private banking business structure in place.

During the award ceremony, President Jung said that he has devoted himself to development of SMEs during much of his 30- year career as a bank employee. He promised to continue generous support to smaller companies, based on his experience and management expertise. In a related development, Kyongnam Bank signed an agreement with the Small and Medium Business Administration (SAMBA) under which the bank will lend some 500 billion won to SMEs with high growth potential. The accord, which went into effect in January 2005, calls for providing preferential loans to SMEs.

Kyong-Duck Jung, President and CEO of Kyongnam Bank, received a special award from the Small and Medium Business Administration. He was the first regional bank president to receive the award, Industrial Service Order, Silver, in recognition of the bank¡¯s generous support of small and medium-size enterprises (SMEs). As of December 20, 2004, the bank¡¯s total loan portfolio exceeded the 7 trillion won mark, of which more than 70% has been channeled into SMEs. President Jung has vigorously developed a flurry of initiatives in support of small companies, so that they would be able to pull themselves out of the prolonged business downturn.

Kyongnam Bank is an avid supporter of college education. The bank donated 600 million won to colleges and universities in South Gyeongsang Province in 2004 in an effort to enhance the education of human resources. Some 30 million won of the donated money was channeled into the hospital of Gyeongsang National University. Since 1996, the bank has extended contributions of some 3 billion won, including the newest donation, to several colleges.