By Jhoo Dong-chan
Major lenders are accelerating their expansion in Vietnam, which is considered to be their next overseas cash cow. Vietnam has enjoyed a 6 percent economic growth in recent years and more than 6,500 Korean firms have already entered the country.
Shinhan Bank Vietnam, which acquired ANZ Bank Vietnam's retail division in April last year, said Thursday it opened four more branches recently to expand its network. Now, the bank has 30 branches there with about 1,500 employees.
Thanks to the growing popularity of the bank's private wealth management (PWM) services, Shinhan Bank Vietnam posted a $56 million net profit last year.
Woori Bank, which established its local corporate body in Vietnam in January last year, said it will also open six more branches this year. It has so far focused on corporate financing, but added it will extend its business to private customers in the future.
The Industrial Bank of Korea, which currently operates one branch in Hanoi and another in Ho Chi Minh City, is pushing to establish a local corporate body in Vietnam.
KB Kookmin Bank only has one branch in Ho Chi Minh City, but is reportedly looking into establishing an affiliate by acquiring a local bank. NH Nonghyup is also operating a branch in Hanoi, and is expected to take a similar approach to expand its presence.
“Vietnam is the only country where the nation's major banks are boasting their presence as if in Korea,” an industry observer said.
“It is true Vietnam is a country with a tremendous potential, but some say the country is already a red ocean for Korean banks. Latecomers could experience difficulties when entering into the market.”
According to the Financial Supervisory Service, Korean banks have opened 428 branches abroad as of September 2017. Of them, 48 branches are located in Vietnam followed by 24 in Indonesia and 20 in Myanmar.
Their entry into the Southeast Asian country is followed by Korean firms' exodus to the region after experiencing difficulties in doing business in China amid deteriorating Sino-Korean ties. The increasing number of middle-class consumers in Vietnam and nearby countries has also encouraged Korean firms to establish a larger presence in the rapidly growing region.