Major financial groups in Korea are rapidly growing the size of banks in Southeast Asia. As the domestic financial market’s growth capacity is limited, the move is aimed at securing a new profit base, centering on local banks, in Southeast Asian markets with high growth potential such as Vietnam, Indonesia, and Cambodia.

According to an analysis of KB Kookmin, Shinhan, Hana, and Woori Bank’s semi-annual report on the 19th, the total assets of major local banks operated by the four major financial groups in Southeast Asia were 52.2635 trillion won at the end of June this year. It increased by 3.4741 trillion won (7.1%) in half a year from 48.7895 trillion won at the end of last year.

Shinhan Financial Group saw the biggest increase. Shinhan Vietnam Bank and Indonesia Shinhan Bank’s total assets increased by 1.8231 trillion won (10.8%) from 16.893.6 trillion won at the end of last year to 18.7167 trillion won at the end of June this year. Among the four major financial institutions, Southeast Asian banks also had the largest assets. In particular, the expansion of local businesses centered on Vietnam, a key market, led to overall growth.

KB Financial Group has also expanded the appearance of banks in Southeast Asia. The combined assets of Cambodia KB Prasak Bank and Indonesia KB Indonesia Bank increased by KRW 1.1333 trillion (7.3%) from KRW 15.4756 trillion to KRW 16.609 trillion during the same period. KB Prasak Bank increased from 8.119 trillion won to 8.8717 trillion won, and KB Indonesia Bank increased from 7.3566 trillion won to 7.73 trillion won, respectively.

PT Bank KEB Hana, the Indonesian subsidiary of Hana Financial Group, also showed near double-digit growth. Total assets increased by 449.3 billion won (9.8%) from 4.5685 trillion won at the end of last year to 5.178 trillion won at the end of June this year.

Woori Finance had mixed feelings of joy and sorrow by country. The combined assets of Southeast Asian banks increased 0.6 percent from 11.8518 trillion won to 11.92 trillion won, the lowest growth rate among the four major financials. Woori Sodara Bank’s assets in Indonesia fell from 5.2611 trillion won to 4.4214 trillion won, while Woori Bank in Vietnam jumped 18.9% from 4.67 trillion won to 5.5528 trillion won. Cambodia Woori Bank also slightly increased from KRW 1.9206 trillion to KRW 1.9457 trillion.

In particular, the expansion of the appearance of local banks is remarkable in Vietnam and Cambodia. Vietnam Woori Bank increased its assets by nearly 900 billion won in half a year, and KB Prasak Bank also increased by more than 750 billion won. Beyond the level of domestic financial companies having overseas branches or offices, the strategy of directly targeting the retail and corporate financial markets through local corporations is leading to results.

Financial groups are working hard on the Southeast Asian market because it is not easy to continue high growth in the domestic market alone. The strategy is to secure long-term growth engines by securing local customers in Southeast Asia, which has relatively high growth potential, and expanding its operating base such as loans and deposits.

Source: Maeilbusiness