Value context and insight. lkm@koreatimes.co.kr
KB, Shinhan soar in overseas net income as Woori, Hana struggle
Hana Bank headquarters in Seoul / Yonhap
By Lee Kyung-min
The country’s four leading commercial lenders — KB Kookmin, Shinhan, Hana and Woori — posted a combined 10 percent increase in overseas net income in the first half of this year over the previous year, buoyed mostly by the stellar performance of KB Kookmin’s Indonesian unit, market watchers said Thursday.
The strong performance of KB Bank’s Indonesian entity, formerly Bank Bukopin, was enough to offset poor revenue by Hana and Woori.
According to Financial Supervisory Service data, the combined overseas net income of the four banks reached 465.3 billion won ($350 million), up 10 percent from the previous year.
KB Kookmin Bank posted 72.7 billion won in net profit, a dramatic turnaround from last year’s 37.1 billion in losses. Central to the recovery was the bank’s efforts to reduce bad loans and revamp cost structures.
KB’s appointment of a local CEO was effective in managing regional operations, with losses dropping to 53.8 billion won, or half of last year’s figure.
Apart from the Indonesian entity, KB’s Cambodian operations also registered a net income of 111.8 billion won, double the previous year’s amount.
Shinhan Bank’s net profit in the January-June period came to 315.2 billion won from its 10 overseas subsidiaries, including those in the U.S. Canada, China and Europe. The figure is up 6 percent from the previous year, but is lower than last year’s 14 percent year-on-year growth.
The poor performance is explained largely by Shinhan’s Vietnamese operations, as its net income dropped 9.4 percent to 128 billion from a year earlier. However, the Vietnamese business figures were more than offset by SBJ Bank, its Japanese arm, whose figure rose to 85.4 billion won, up 20 percent from the previous year.
Meanwhile, Hana’s overseas net income dropped 44.9 billion won, down 36 percent, due to reduced interest income brought on by key rate cuts in Canada and Germany.
Woori Bank’s overseas net income also dropped to 32.5 billion won in the first half of this year, down from 94.4 billion the previous year. Fraud at the bank’s Indonesian subsidiary earlier this year led to a large increase in provisions, which were recorded as losses in its books.
Market watchers say the Korean lenders are likely to bolster their overseas businesses as they are strained by fierce competition in the saturated local market.
“Most of the lenders are reporting overseas business income of less than 10 percent of their portfolio,” an industry official said. “They will likely increase the figure to well over 10 percent in the quarters to come.”