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| Woori Financial Group Chairman Sohn Tae-seung stands in front of the group's global network map at its headquarters in central Seoul, in this photo provided by the group, Monday. / Courtesy of Woori Financial Group |
Overseas expansion, digital competence at center of Woori's strategy
By Kim Bo-eun
At Woori Financial Group's strategic meeting for the second half of the year, Chairman Sohn Tae-seung pledged to make the group's overseas business account for 40 percent of total earnings.
He also named global business as one of Woori's four pillars of growth, along with wealth management, corporate and investment banking and the digital division.
In line with the group's strategy, the growth of Woori's global network accelerated in the second half of this year.
As of November, the group has 465 outlets in 26 countries across Asia, Europe and the Americas. Outlets refer to all offices, branches and corporate entities.
Among the group's units, Woori Bank, the flagship of the group, has 444 outlets in 26 countries, while Woori Card has 20 in Myanmar, and Woori Asset Management has one in Vietnam.
Earnings from Woori's overseas entities have grown rapidly, along with the group's physical expansion.
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Woori's net profit from its overseas operations for the first three quarters of this year grew to $153 million (180 billion won), a 22 percent leap from the same period a year earlier. At this rate, its net income is expected to top 200 billion won this year.
Overall, the bank has the largest number of outlets and these are concentrated in Southeast and Southern Asia, which is the region Woori is focusing on.
Among Woori's achievements in the first half of this year is expanding its network in promising regions of growth including Vietnam and Cambodia.
Woori has also been focusing on Southern Asia, establishing branches in India and Bangladesh.
In September, net profit coming from Southeast and Southern Asia accounted for 50 percent of Woori's global earnings.
Net profit of the region grew from $42 million in 2016 to $60 million won 2017, $76 million in 2018 and $74 million as of September this year.
Focusing on Southeast Asia
Woori began shifting its focus to overseas markets in 2010, as it faced limited growth in the local market due to the low interest and low growth rates here.
At the time, Woori Bank's overseas assets and profits accounted for only 10 percent of the total, which was far less than the figure for major global banks which was over 30 percent.
Woori designated Southeast Asia as the first region it would expand into, to become a leading financial group in Asia.
In 2014, Sohn, as the executive in charge of global business, devised a differentiated expansion strategy.
The usual route for financial firms was to begin by opening an office, then making it a branch and finally turning it into a subsidiary. They also began by expanding into developed economies such as the U.S. and Japan.
Woori had entered Indonesia in 1992 and offered financial services for Korean companies there, but decided in 2010 to take a different strategy.
Woori acquired Indonesia's Saudara Bank in late 2014, as a means to localize and expand retail banking there.
Its M&A experience with Saudara Bank served as a basis for Woori's growth following expansion efforts.
Woori has carried out more M&As in the region, taking over a credit firm in Cambodia in 2014, a savings bank in the Philippines in 2016 and another savings bank in Cambodia in 2018.
Among local banks, Woori Bank has the most extensive global network, and ranks 20th among global financial institutions in terms of global reach.
"We will seek out M&A opportunities in Southeast Asian countries including Indonesia, Vietnam and the Philippines as well as in Southerb Asia to make overseas earnings account for 40 percent of our total earnings, up from the current 10 percent," Woori Financial Group Chairman Sohn Tae-seung said.
Digital strategy
Woori is also set to focus on mobile banking in Southeast Asia as the market continues to grow. This is a strategy for Korean banks as they lack branches there.
Woori plans to cooperate with leading IT and platform firms to expand mobile banking services in the region. It is currently seeking partnerships with local entities including telecommunications and mobile messenger companies to launch new services.
Such collaboration is in line with Woori's digital strategy to join hand with fintech firms to offer better services.
As a means to become a digital-centered financial firm, the group has enabled the digital division to independently push forward with projects and has provided it with autonomy in managing its budget.
Its core strategy is to open up its data, proprietary software and its customer base to develop products and services together with partners and customers.
Investment banking
Its plans for the latter half of the year include boosting global non-interest income through increasing profits from investment banking.
Woori's global investment banking centers are playing a key supporting role, and the bank is seeking to strengthen their roles to take part in syndicated loans in major global markets and boost financing in emerging economies.
Woori currently has such centers in New York, London, Sydney, Singapore, Ho Chi Minh City, Mumbai, Dubai and Frankfurt.
The group also has a credit screening center in Singapore, which is in charge of credit screening for subsidiaries in China, Vietnam and Indonesia and branches in Hong Kong, Dhaka and Dubai.
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