Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Korean banking groups to offset Myanmar losses in Southeast Asia
The headquarters of Bank KB Bukopin located in Jakarta, Indonesia / Courtesy of KB Kookmin Bank
By Anna J. Park
Korean banks preparing to expand businesses in ASEAN
By Anna J. Park
Expansion of overseas branches has become a key growth engine for major banks' business strategies, particularly in the Southeast Asian region.
Despite unpredictable political situations in some countries in the region, as seen in the case of Myanmar where a number of Korea-headquartered banks were preparing to expand their businesses there, major banks are bracing for further growth in the region.
KB Kookmin Bank has recently decided to join in the capital increase of 400 billion won ($340 million) for its Indonesian subsidiary, Bank KB Bukopin. KB Kookmin Bank became the largest shareholder of the Indonesian bank with a 67 percent stake, acquiring the additional equity in 2019, following its initial investment in 2018.
With the capital increase, the bank expects its Indonesian subsidiary bank could further attract new customers, while enhancing IT infrastructure. Bank KB Bukopin now has total assets of 5.82 trillion won as of the end of June, garnering an operating profit of 221.3 billion won in the first half of this year.
PRASAC Microfinance Institution in Cambodia is KB Kookmin Bank's other major foothold in Southeast Asia. With total assets of 4.3 trillion won as of the end of June, the bank brought in an operational profit of 401.4 billion won and net profit of 90.6 billion won during the first half of this year. With the encouraging performance, KB Kookmin Bank decided to acquire the remaining 30 percent of PRASAC Microfinance earlier this week. As the Korean bank now owns 99.99 percent of the Cambodian bank, the bank expects its global profit to increase in the second half of this year.
“The acquisition will mark a cornerstone of retail network expansion in Asian countries,” an official from KB Kookmin Bank explained, adding that the bank plans to transform the institution into a major commercial bank in Cambodia.
Such profits would offset damages incurred in Myanmar; KB Kookmin Bank's Myarnmar operation had 5.3 billion won of loss during the first half of this year.
“As overseas operation is distinctively different in their characters according to each country, the bank aims to take differentiated approach in management strategy,” the official from KB Kookmin Bank said. “In case of Myanmar, the impact was greater as it was focused on retail business,” he added.
Bank Woori Saudara (BWS) located in Jakarta, Indonesia / Courtesy of Woori Bank
Woori Bank also garnered a robust profit from its Cambodian operation during the first half. Woori integrated two of its subsidiaries in Cambodia early last year into WB Finance, and it achieved 20.9 billion won of net profit during the first half. Woori Bank's Indonesian subsidiary Bank Woori Saudara (BWS) as well as Woori Bank Vietnam both grossed 27.9 billion net profit in the first half of this year.
The bank attributed to successful localization as the key to the growth in the Southeast countries.
“Strengthened localization strategies will continue to maintain stable and effective growth rate,” an official from Woori Bank said. “The bank further plans to seek mid- and long-term growth engine through capital increase, M&As and innovations at digital platforms.”
Shinhan Bank, meanwhile, saw a year-on-year increase of 19.1 percent in its first half net profit garnered from all its overseas operation with over 120 billion won. Shinhan Bank Vietnam was the strongest performer with grossing 58.5 billion won, based on its differentiated digital service along with the bank's successful localization strategy. While Shinhan operates largest size of overseas operation in Southeast Asian countries, including Cambodia and Indonesia, the bank also logged a net profit from its Japanese subsidiary SBJ also rose to 39.1 billion won from 30.9 billion in the first half of last year.
Hana Bank meanwhile saw its net profit decreased to 76.3 billion won in the first half of this year, compared to 98.9 billion won logged during the same period last year, due mainly to its decreased net profit in Indonesian subsidiary.