Shinhan closing in on HSBC to be top foreign bank in Vietnam

Shinhan Bank Vietnam Ltd., the Vietnamese subsidiary of Shinhan Bank, is close to becoming the top foreign bank in Vietnam thanks to its solid performance amid the global coronavirus crisis and its advanced digital financial services, according to the financial industry on Oct. 27.

Shinhan's Vietnamese branch posted 57.7 billion won ($51.1 million) in net profit in the first half of this year, a 1.6% year-on-year increase from the 56.8 billion won ($50.3 million) of last year. At this rate, it is likely to be the only foreign branch of a South Korean bank to post an annual net profit of over 100 billion won.

The Vietnamese branch is competing against global bank HSBC to claim the title of No. 1 foreign bank in Vietnam. In terms of number of offices, Shinhan Bank Vietnam is in the lead with 38 offices. Further, its net profit of $97 million last year is close behind HSBC Vietnam's $120 million in the same period.

Shinhan Bank Vietnam’s net profit from last year is almost on par with the Korean financial group’s affiliates. Last year, Shinhan Life Insurance Co. and Shinhan Capital Co. posted 123.9 billion won and 126 billion won in profit, respectively.

Shinhan Bank’s Vietnamese operations are credited with putting up a good fight as Vietnam adopted strict containment measures at the beginning of the COVID-19 spread, a hurdle for banking operations. Yet, the company’s focus on increasing retail banking services through non-contact measures was effective.

By the year-end, the bank is expected to beat its own record for foreign branches run by Korean banks, beating last year's record-high net profit of 124.3 billion won .

AGGRESSIVE LOCALIZATION STRATEGY

Shinhan Bank Vietnam’s success is owing to its aggressive localization strategy given that it hired 97% of its 2,000 employees from Vietnam. Also, its mobile financial services app Shinhan Vietnam SOL has surged in popularity among young adult users thanks to the boom in non-contact financial services.

“Financial markets in Southeast Asian countries such as Vietnam have a high proportion of young adults and a sharp economic growth rate, which all point to significant growth potential,” said a company source. “Our goal is to become a retail banking business comparable to local banks.”

Earlier this month, Shinhan Bank opened up a new office in Can Tho, an industrial city near the Mekong River, in a move to bolster its network in Vietnam. The bank has base operations in the five major cities Hanoi, Ho Chi Minh, Danang, Hai Phong and Can Tho.

Expansion in Vietnam is spearheaded by Shinhan Bank President Jin Ok-dong who wants to position Vietnam as a strategic base from which to target the Indochinese Peninsula, including Cambodia and Myanmar.

Another key factor for Shinhan Bank’s success in Vietnam is attributed to its offering of total financial services for small- and medium-sized Korean companies that have entered the Vietnamese market, such as partners of Samsung Electronics Co. The Vietnamese branch operates a center that provides consultation and corporate financing, such as office setups and loans.

Write to Dae-hun Kim at daepun@hankyung.com
Danbee Lee edited this article.