Heading to India to Establish Joint Venture... Rolling Up Sleeves to Expand Overseas Revenue Sources
Reflecting Management Philosophy in Personnel... "Urgent Need to Restructure Group Portfolio to Cope with Low Interest and Low Growth Era"
[Asia Economy Reporter Haeyoung Kwon] Kim Kwangsoo, Chairman of NH Nonghyup Financial Group, began his first steps of the new year with a business trip to India. The trip aims to establish a joint venture with an Indian specialized credit finance company, marking the start of global management efforts from the beginning of the year to expand overseas revenue sources for Nonghyup Financial, which has a weak foundation.
According to financial circles on the 13th, Chairman Kim embarked on a trip to India to sign a share investment contract with the Indian capital company Kisan Finance.
Kisan Finance is a specialized credit finance company focused on agricultural tractor financing in India. NH Nonghyup Capital, a subsidiary of Nonghyup Financial, will invest shares in this company. The stake secured by Nonghyup Capital is reported to be about 30%, a level that allows management participation.
By entering India in the form of installment financing for agricultural machinery, Nonghyup Financial can leverage its unique strength of linking agriculture and finance. In particular, by proceeding in the form of a joint venture through Nonghyup Capital instead of establishing a local corporation, it is expected to utilize the sales network of the local Indian financial company as is and reduce initial investment risks in overseas business.
With Nonghyup Capital establishing a joint venture in India following the joint venture in China in 2016, Nonghyup Financial plans to actively expand its overseas business this year, which has been less solid compared to other financial holding companies.
Chairman Kim said earlier this month in a meeting with reporters, "This year, we will seek overseas expansion mainly in Southeast Asia in the form of joint ventures (JV)," adding, "The start will be India." In his New Year's address, he emphasized, "To establish identity as a profit center and sustainable management, we must achieve a harmonious balance between profitability and soundness and redesign Nonghyup Financial to adapt to changes in the management environment," and stressed, "It is necessary to reorganize the group portfolio, including expanding non-interest income, non-bank sectors, and overseas business to respond to the low-interest, low-growth era."
Currently, Nonghyup Financial has entered overseas markets mainly through its affiliates in banking, securities, and capital. The bank has established local corporations such as Nonghyup Finance Cambodia and Nonghyup Finance Myanmar in Cambodia and Myanmar, respectively, in addition to the United States, China, Vietnam, and India, conducting microfinance (MFI) business targeting low-income groups.
The securities affiliate has expanded into the United States, the United Kingdom, China, Hong Kong, Singapore, Vietnam, and Indonesia. The capital affiliate has been actively moving, having invested about 30% in the Chinese Gongso Group (Tianjin) International Finance Leasing Co., Ltd. joint venture in 2016 and now entering the Indian market.
The will to expand global business is also evident in personnel changes. Last year, Son Byunghwan, who was in charge of the bank's global business division, was appointed as the new vice president of Nonghyup Financial at the end of the year. Son, a representative planning strategist who has served as head of smart finance, planning office chief, and director of the Nonghyup Future Management Research Institute, is expected to focus on discovering new revenue sources such as overseas markets and digital enhancement as head of the management planning division.
A financial industry official said, "Since Nonghyup Financial was launched in 2012, it will take time for overseas business to get on track and generate meaningful profits," adding, "It is noteworthy that Nonghyup Financial is expanding its overseas market mainly in Southeast Asia with a specialized approach unique to Nonghyup Financial, leveraging its strength as an agriculture-centered finance linking agricultural loans and agricultural machinery installment financing."
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