[Financial Overseas Expansion] ② Shinhan, the 'Vietnam Powerhouse,' and KB Targeting 'Leading Bank in Cambodia'

Shinhan Financial's Global Revenue Grows 10.9% Annually
Vietnam Bank Proves 'Golden Child'
KB Advances in Cambodia
Integrated Commercial Bank KB Prasac Bank Launched

Domestic banks are accelerating their global expansion. In the case of Shinhan Bank, Shinhan Vietnam Bank has firmly established itself and continues to maintain strong performance, while KB Kookmin Bank has recently achieved significant results by launching the integrated commercial bank KB Prasac Bank in Cambodia. KakaoBank, which has been highly successful as an internet-only bank in Korea, is aiming to enter the uncharted territory of 'Thailand' as the first internet-only bank to do so.

'Vietnam' Shinhan, 'Cambodia' KB

According to Shinhan Financial Group on the 3rd, the group's global net profit for the second quarter was 310.3 billion KRW, a 10.9% increase compared to the previous year (279.7 billion KRW). Banks hold a significant portion of Shinhan Financial's global business, with Shinhan Vietnam Bank playing a key role. Shinhan Financial established the first Korean representative office in Vietnam in 1992 and founded Shinhan Vietnam Bank in 2009, steadily growing since then and is regarded as the best-established among domestic banks. Shinhan Vietnam Bank's net profit for the first quarter was 67.561 billion KRW, a 68% increase compared to the previous year (40.323 billion KRW). The net profit of Shinhan Bank's 10 overseas subsidiaries (USA, China, Japan, Europe, Canada, Mexico, Indonesia, Vietnam, Kazakhstan, Cambodia) was approximately 129.7 billion KRW, up 37.4 billion KRW (40.5%) from the previous year (92.3 billion KRW).

KB Kookmin Bank is showing results in Cambodia. KB Kookmin Bank is in the final stages of merging the microfinance institution Prasac Microfinance with KB Cambodia Bank. Once the Ministry of Commerce of Cambodia grants final approval, 'KB Prasac Bank' will be launched. KB Cambodia Bank and Cambodia Prasac Microfinance posted net profits of 2.097 billion KRW and 46.2 billion KRW respectively in the first quarter, with Prasac's net profit reaching 78.8 billion KRW in the first half of this year. Namhoon Cho, Executive Director of KB Financial, who oversees global business, said, "We will continue to strengthen our sales capabilities by utilizing over 180 nationwide branch networks and more than 5,000 loan sales personnel," adding, "We aim to narrow the gap with leading banks through securing low-cost deposits, targeting the QR payment market, and expanding loans to small business owners, and in the long term, internalize KB's advanced digital capabilities to lead the Cambodian financial market."

However, KB Kookmin Bank still faces issues with KB Bukopin Bank in Indonesia. KB Bukopin Bank recorded a loss of over 120 billion KRW in the first half of this year. The bank explained that this was due to provisions set aside proactively for soundness management. Some view that KB Bukopin Bank requires long-term observation. A financial authority official said, "Since it is still in a soft landing phase and the Indonesian market has significant growth potential, the loss situation is not considered a major problem." KB Kookmin Bank aims to normalize KB Bukopin Bank's management by 2025.

Woori Bank and Hana Bank show remarkable progress in their Chinese subsidiaries. Hana Bank (China) Co., Ltd. posted a net profit of 13.338 billion KRW in the first quarter, a 234% increase compared to the previous year. Woori Bank China also recorded a net profit of 20.693 billion KRW in the first quarter, a 303% increase year-on-year. A financial industry insider commented, "In Southeast Asia, financial culture is still relatively underdeveloped compared to advanced countries, and due to local regulations and other conditions varying by country, there are fluctuations."

KakaoBank Targets Untapped Market... Internet Banks Pioneer Overseas Expansion

In June, KakaoBank partnered with SCBX, the financial holding company that owns Siam Commercial Bank (SCB), to pursue entry into the Thai internet-only banking market. KakaoBank is forming a consortium with SCBX to obtain a virtual bank license in Thailand. Having solidified its position as an internet-only bank domestically, KakaoBank plans to expand its business through overseas entry. Particularly in Thailand, digitalization is accelerating across industries, and earlier this year, the Bank of Thailand announced plans to issue new digital bank licenses.

Whether KakaoBank will succeed in entering Thailand is a matter of industry interest. Thailand has long been considered an 'untapped market' for domestic financial firms. During the 1997 Asian financial crisis, Korean banks that had entered Thailand withdrew en masse despite requests from the Thai government to stay, straining relations and making it difficult for Korean financial firms to enter Thailand thereafter. A senior banking official said, "Overseas subsidiaries struggle because it is really difficult to build relationships with local authorities," adding, "Unless the CEO resides in Thailand to manage affairs directly, it will not be easy."

Financial Authorities Also Provide Support

Financial authorities are also actively supporting domestic financial firms' overseas expansion. Financial Supervisory Service (FSS) Governor Bokhyun Lee visited Southeast Asia, including Thailand, Singapore, and Indonesia, in May, and plans to visit London, UK, and Frankfurt, Germany, in September.

Governor Lee is promoting plans to hold investor relations (IR) meetings targeting local investors together with major financial firms such as Shinhan Financial Group Chairman Jin Okdong, Woori Financial Group Chairman Lim Jongryong, Korean Re, Samsung Life Insurance, and Mirae Asset Life Insurance. During this trip, meetings with the UK's Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are also expected.

An FSS official said, "Going overseas directly and signaling to investors that the supervisory authorities are actively supporting Korean financial firms and cooperating closely sends a strong message."