Looking at Overseas Subsidiary Performance, Shinhan and Woori 'Smile'
The overseas subsidiaries' performance of the four major commercial banks (KB, Shinhan, Hana, Woori) showed significant divergence. Shinhan Bank maintained its lead with the consecutive strong performance of its 'cash cow,' Shinhan Vietnam Bank, while KB Kookmin Bank struggled to find a turnaround opportunity as its Indonesian subsidiary, KB Bukopin Bank, remained in the red.
According to the Financial Supervisory Service's electronic disclosure system on the 21st, Shinhan Bank's 10 overseas subsidiaries (in the US, China, Japan, Europe, Canada, Mexico, Indonesia, Vietnam, Kazakhstan, and Cambodia) recorded a net profit of approximately KRW 426.9 billion last year. This represents a 66.24% increase compared to the previous year (about KRW 256.8 billion).
The overseas subsidiary leading Shinhan Bank's improved performance was Shinhan Vietnam Bank. Last year, Shinhan Vietnam Bank's net profit was about KRW 197.7 billion, up 53.1% from the previous year (approximately KRW 129.1 billion).
The scale of Shinhan Vietnam Bank's net profit ranks sixth among all subsidiaries of Shinhan Financial Group, following banks, card companies, securities, life insurance, and capital companies. Other subsidiaries such as SBJ Bank (KRW 116.7 billion), Shinhan Bank China Limited (KRW 45.7 billion), and Shinhan Indonesia Bank (KRW 12.5 billion) also saw significant increases in net profit. This is attributed to strengthening non-face-to-face digital operations in regions like Vietnam and Japan.
Shinhan Vietnam Bank is a key overseas subsidiary that Shinhan Bank is focusing on. Officially launched in 2009, Shinhan Vietnam Bank is building a network across all five major metropolitan cities in Vietnam (Hanoi, Ho Chi Minh, Haiphong, Da Nang, Can Tho) and holds the number one position among foreign banks in the country.
On the other hand, KB Kookmin Bank, which competes with Shinhan Bank for the leading bank position, appears to be struggling in its overseas business. The deficit of KB Bukopin Bank, an Indonesian local subsidiary acquired by KB Kookmin Bank to expand its global business, actually widened last year. KB Bukopin Bank recorded a net loss of about KRW 802.1 billion last year, tripling the deficit from 2021 (approximately KRW 272.5 billion).
Looking in detail, except for KB Cambodia Bank (Kookmin Bank Cambodia PLC.) and Cambodia Prasac Microfinance (PRASAC Microfinance Institution PLC), all other subsidiaries posted losses. Last year, KB Kookmin Bank's overseas subsidiaries in China and Myanmar underperformed expectations. The Chinese subsidiary recorded a loss of KRW 869 million last year due to the impact of COVID-19 and other factors, turning to a deficit. KB Myanmar Bank also recorded a net loss of KRW 1.333 billion.
In particular, the labor union at Bukopin Bank has officially raised concerns. Kim Jeong, chairman of the KB Kookmin Bank labor union, said, "There was a failure to properly identify issues from the initial investment itself," adding, "We are trying to appoint an Indonesian expert as an outside director, considering proper review and even the possibility of halting investment."
KB Kookmin Bank explained the poor performance of KB Bukopin Bank by stating, "The deficit widened due to setting aside KRW 569.6 billion in provisions to improve Bukopin Bank's financial structure."
Other banks also showed mixed overseas performance. Woori Bank led with three subsidiaries: Indonesia Woori Sodara Bank (about KRW 68.4 billion), Vietnam Woori Bank (about KRW 63.2 billion), and Cambodia Woori Bank (about KRW 59.8 billion), generating a net profit of approximately KRW 288.4 billion. This is about a 65.1% increase compared to the previous year (about KRW 174.6 billion), attributed to strengthening digital finance in Indonesia and Vietnam.
In the case of Hana Bank, despite a loss of KRW 97.1 billion by Hana Bank (China) Limited due to provisions, subsidiaries such as Indonesia PT Bank KEB Hana (about KRW 51.5 billion), Canada KEB Hana Bank (about KRW 16 billion), and Russia KEB Hana Bank (about KRW 13.8 billion) performed well. Additionally, equity-method income from Vietnam Investment and Development Bank (BIDV), in which Hana Bank holds a 15% stake, increased by about 33% year-on-year to KRW 160.7 billion.
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