'Global Betting Paid Off' Card Companies Show Resilience in Overseas Subsidiaries Despite COVID-19 in Q1

Shinhan Card and Four Subsidiaries Including Vietnam
Total Net Profit of 3.126 Billion KRW
KB Kookmin and Woori Card Also in the Black

[Asia Economy Reporter Ki Ha-young] Despite the impact of the novel coronavirus disease (COVID-19) in the first quarter of this year, overseas subsidiaries of credit card companies posted solid earnings. Although still minimal compared to the total revenue of credit card companies, it appears to be establishing itself as a pillar of business diversification.

According to the first quarter business reports of each company on the 1st, overseas subsidiaries of Shinhan, KB Kookmin, and Woori Card recorded profits in the first quarter of this year. Shinhan Card achieved a total net income of 3.126 billion KRW from four overseas subsidiaries in Vietnam, Myanmar, Indonesia, and Kazakhstan. Shinhan Vietnam Finance, which showed significant growth last year, led the overall performance with a net income of 2.761 billion KRW. Shinhan Finance LLC in Kazakhstan recorded a net income of 526 million KRW, and Shinhan Microfinance, operating a microloan business in Myanmar, posted a net income of 327 million KRW.

However, Shinhan India Finance, which turned profitable last year with a net income of 465 million KRW, returned to a net loss of 488 million KRW. The company explained that it is facing difficulties due to the worsening economic situation and financial market stagnation in Indonesia caused by COVID-19. In fact, Indonesia's financial market has shown instability, such as a significant decrease in foreign exchange reserves, as it responded to capital outflows and exchange rate volatility caused by COVID-19.

Overseas subsidiaries of KB Kookmin Card and Woori Card also achieved profits in the first quarter of this year. KB Kookmin Card’s local subsidiary in Cambodia, KB Daehan Special Bank, established in 2018, recorded a net income of 48 million KRW in the first quarter. KB Daehan Special Bank, which posted a net loss of 255 million KRW in 2018, turned profitable last year with a net income of 107 million KRW. Woori Card’s overseas subsidiary, Myanmar Tutu Finance, is also sailing smoothly with a net income of 1.125 billion KRW in the first quarter. Tutu Finance recorded a net loss of 346 million KRW in 2018 but posted a net income of 2.71 billion KRW last year.

Overseas subsidiaries of Lotte Card, which are still in the early stages of overseas expansion, continued to post losses in the first quarter of this year following last year. Lotte Finance Vietnam, Lotte Card’s overseas subsidiary, recorded a net loss of 1.798 billion KRW in the first quarter. The loss increased by 642 million KRW compared to the same period last year due to the contraction of the local economy in Vietnam caused by COVID-19. However, Lotte Card expects Lotte Finance Vietnam to gradually increase profits as it is still in the investment phase.

Not only overseas subsidiaries but also credit card companies succeeded in defending their performance in the first quarter despite consumption contraction caused by the impact of COVID-19. The net income of seven specialized credit card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, and Hana Card) in the first quarter was 521.7 billion KRW, an increase of 14.3% compared to the same period last year. Continuous cost reduction efforts, revenue diversification, and strengthened risk management are cited as the reasons. However, concerns about revenue decline are rising from the second quarter due to the prolonged COVID-19 pandemic.