Indonesia, Vietnam boost Korean banks’ overseas profits

South Korea’s top four banks posted sharp earnings growth in overseas operations in the first half of this year, buoyed by solid profits in Indonesia and Vietnam.

Kookmin Bank, Shinhan Bank, Woori Bank and Hana Bank reported a combined net profit of 604.4 billion won ($456 million) from their overseas operations in the first half of this year, up 44% from a year before, according to their public disclosures.

Kookmin led the pack in terms of earnings growth. Net profits from its overseas arms amounted to 114 billion won, up 166.8% from a year before.

Indonesia’s Bank Bukopin, in which Kookmin acquired a majority stake in 2020, swung to a net profit of 8.4 billion won ($6 million) in the first six months of this year, versus a 74.3 billion won loss in the previous year.

The South Korean lender had injected a total of 1.4 trillion won in its Indonesian arm since 2021 to offload its non-performing loans.

“Bukopin's profits in the first half could be a one-off effect after it increased provisioning (against bad loans), so we are unsure it will be able to post a full-year profit,” said a Kookmin Bank official. “But it will achieve a full-year profit by 2025 as planned.”

Kookmin’s Chinese subsidiary also swung to a profit of 23.1 billion won in the first half, compared with the previous year’s 9.7 billion shortfall. China’s border reopening early this year provided a boost to the unit's earnings.

In Myanmar, KB Microfinance Myanmar and KB Myanmar turned to the black with a net profit of 1.2 billion won and 1.3 billion won, respectively.

The following are the first-half results of the four banks' overseas units:

	H1 Net Profit	Year-on-Year Change
Kookmin Bank	114 billion won	166.8%
Shinhan Bank	260 billion won	34.9%
Woori Bank	152.7 billion won	14.2%
Hana Bank	77.8 billion won	72.6%
(Source: H1 financial reports)

HANA BANK

Hana Bank also reported solid first-half results in Indonesia. Its Indonesian subsidiary posted a net profit of 19.4 billion won, trailed by the Chinese unit’s 17.6 billion won and the Canadian arm’s 9.4 billion won.

Hana was the first South Korean bank to advance into Indonesia. It set up a subsidiary in the Southeast Asian country in 1990. In 2021, it launched a digital banking service in collaboration with LINE Bank in the country.

Woori Bank reaped decent profits in Indonesia as well. Bank Woori Saudara, based in Indonesia, chalked up 34.5 billion won in net profit, the largest profit among Woori’s 11 overseas units.

Woori Bank Vietnam logged a net profit of 30.4 billion won in the first half. In China and Cambodia, Woori posted a net profit of 29.2 billion won and 21.2 billion won, respectively.

In Southeast Asia, it has diversified into corporate banking, auto financing and online banking services.

IN VIETNAM

Shinhan reported the largest net profit from overseas operations among the four South Korean lenders in the first half of this year. In Vietnam, it also reaped the largest earnings among them.

In the first half of this year, Shinhan Bank Vietnam earned 126 billion won in net profit, up 46.1%. The results accounted for half of the combined profits of 260 billion won from its overseas operations.

Shinhan Bank became the first South Korean financial services company to enter the Vietnamese market, after opening a branch there in 1992.

Its Vietnamese subsidiary runs 50 branches, the largest number for a foreign bank operating in the country. It ranks first in terms of both assets and net profit as a foreign lender in Vietnam.

Shinhan’s units in Japan and China reported 61.2 billion won and 30.2 billion won in net profit, up 18.1% and 12.6% on-year, respectively.

Write to So-Hyun Lee at y2eonlee@hankyung.com
Yeonhee Kim edited this article