Korea's Shinhan, Hana accelerate overseas push after record profits

South Korean major banks aim to accelerate their expansions in other countries as their overseas investments paid off with record profits last year amid tougher business conditions in the local market.

Shinhan Bank, the lender of South Korea’s No. 2 financial institution Shinhan Financial Group, reported the largest-ever net profit of 549.3 billion won ($417.1 million) in 2023 from its overseas businesses thanks to healthy earnings from key markets such as Vietnam and Japan, according to industry sources in Seoul on Thursday.

“We are enjoying balanced growth in household and corporate loan sectors despite increasing uncertainties in the global market,” said Seo Seung-hyun, head of Shinhan Bank’s global business. “We successfully attracted corporate funds of Kazakhstani companies that left Russia amid the prolonged war between Russia and Ukraine.”

Shinhan Bank plans to expand overseas retail businesses with customized products for each country. The bank joined hands with foreign fintech service providers such as Ant Group and Du Xiaoman Financial in China, Zalo in Vietnam and Kredivo Group in Indonesia for businesses in those markets.

HANA PARTNERS WITH TOP LOCAL FINANCIAL FIRMS

Hana Bank, a unit of South Korea’s third-largest Hana Financial Group, logged a net profit of 553.2 billion won last year from overseas businesses, the largest since it started making inroads abroad countries in 1967. The lender’s net profit from overseas businesses reflecting equity method accounting totaled at 540.1 billion won.

Its Chinese unit turned to the black, while net profits of its units in the US, Hong Kong and the Philippines also improved.

The bank sought partnerships with top financial firms in each market by signing cooperation deals with the State Bank of India, CTBC Bank in Taiwan and the Saudi Export-Import Bank last year.

KB Kookmin Bank, the flagship banking unit of South Korea’s top KB Financial Group, will focus on a turnaround for its Indonesia subsidiary KB Bank, formerly PT Bank KB Bukopin.

KB Kookmin Bank reduced its net loss from overseas businesses to 24 billion won in 2023 from 412.3 billion won the previous year.

Woori Bank, a unit of South Korea’s Woori Financial Group, increased capital by $500 million for the lender’s key three Southeast Asian units to expand its overseas profits to 25% of its total profits by 2030.

The bank’s overseas businesses made up only 12% of its total profit last year.

RECORD NET PROFIT

South Korean banks together reported their largest-ever net profit last year, a regulator said.

Their combined net profit rose 15% to a combined 21.3 trillion won in 2023, according to the Financial Supervisory Service.

Interest incomes increased 5.8% to 59.2 trillion won as their average net interest margins (NIM), a key indicator of banks’ profitability, edged up 0.03 percentage point to 1.65%.

Non-interest incomes surged 68% to 5.8 trillion won on healthy securities-related profits amid low market interest rates, the FSS said.

The highly liquid three-year South Korean government bond yield fell to 3.71% in the fourth quarter of 2023 on average from 3.91% a year earlier, according to the regulator.

Write to Jae-Won Park and Hanjong Choi at wonderful@hankyung.com
 

Jongwoo Cheon edited this article.