Korean banks seek cash cow in Cambodia

By Jhoo Dong-chan

Korea's commercial banks are expanding their presence in Cambodia by providing differentiated financial services for customers, bank officials said Thursday.

In line with the Moon Jae-in administration's New Southern Policy, banks have done their utmost in developing new growth engines in Southeast Asian countries to overcome the saturated domestic market. And Cambodia is becoming their El Dorado, reflecting its rapid economic growth.

According to financial circles, Shinhan and KB Kookmin Bank have entered the Cambodian market by establishing corporate bodies, while Woori acquired a local savings bank and a microfinance firm there.

“Banks require a joint guarantee when a debtor loans money here since Cambodia hasn't fully developed a credit rating system yet,” Shinhan Bank Cambodia head Lee Tae-kyung said.

“Like Cambodia, a friend or family member often stood as a joint surety for a loan in Korea about 30 years ago. We have been there. Korean banks could be an ideal partner as we have had a similar experience.”

Shinhan Bank entered the Cambodian market in 2007, and has since expanded its branches actively across the country. It said it currently has six branches there but plans to add two more by the end of this year.

Unlike Vietnam where Korean banks focus on business with Korean firms, about 90 percent of customers in Cambodia are locals. Reflecting its customer pool, Shinhan has concentrated on retail loans there for years.

Shinhan Bank Cambodia's total assets were worth $188 million in 2017 and stretched to $251 million last year. As of the end of March, its assets stood at $311 million.

KB Kookmin Bank has actively utilized its mobile app, Liiv, to attract customers in Cambodia. The app's users totaled 11,900 when the bank launched it in 2016, but it now has 78,000 users.

The app offers discounts of up to 50 percent depending on affiliate stores in Cambodia. Reflecting an increasing number of Cambodian workers in Korea, Liiv also provides international wire transfer services between the two countries.

KB Cambodia earned $143,000 in overseas remittance service fees via the app last year.

Woori Bank renamed the two Cambodian affiliates it acquired in the Southeast Asian nation as Woori Bank Finance and Woori Finance Cambodia.

Woori said it will merge the two firms by the end of the year while enhancing the microloan services of the latter.

“We don't just offer a loan service at our branches. We visit customers at their request to provide loans,” a bank official said.