Lotte Card expanding presence in Vietnam

Lotte Card CEO Kim Chang-kwon, fourth from left, poses with officials from Vietnam's central bank, during the opening ceremony of Lotte Finance at Lotte Hotel Hanoi in this June 25 file photo. / Courtesy of Lotte Card

By Park Jae-hyuk

Lotte Card has sought to strengthen its foothold in Vietnam by making mass investments in its subsidiary there, to take advantage of the Southeast Asian country's fast-growing consumer finance market.

According to its latest regulatory filings posted on the Credit Finance Association's website, the company extended credit worth $72 million to Lotte Finance Vietnam, June 24. Lotte Finance Vietnam is Lotte Card's Vietnamese operation that was launched in December.

The regulatory filings showed that the purpose of the credit extension was to guarantee payment of the local subsidiary's debts.

As the parent company having high credit rating stands surety for the subsidiary, Lotte Finance Vietnam, which needs more money for its business expansion there, has been able to get loans at lower interest rates.

Market observers expect the recent financial support will boost the profitability of Lotte Card's Vietnamese subsidiary.

They also anticipate that Lotte Card will continue its cooperation with Lotte affiliates, despite the MBK Partners-Woori Bank consortium's acquisition of the credit card company.

In May, Lotte Group agreed to sell its 80 percent stake in the credit card unit to the consortium. As the third-largest shareholder holding the remaining 20 percent stake, however, the conglomerate has been involved in management of the card firm.

According to market observers, the consortium is expected to allow Lotte Card to team up with Lotte affiliates, considering the group's 10 years of work in the Vietnamese market.

Since it opened an office in Vietnam in 2009, the fifth-largest credit card company in Korea has gone all out to expand its presence in the Southeast Asian country.

In April, Lotte Card became the first Korean card firm to launch a credit card business in Vietnam. In 2018, it launched customer loan and installment finance services there.