Banks see net incomes decline in Southeast Asia

Korea’s top four commercial lenders are facing significant challenges in Vietnam, Indonesia, and Cambodia due to sustained economic stagnation and elevated interest rates over the period of years since the pandemic began, data showed Friday.

Shinhan Bank Vietnam was the only high-performing Korean bank in the three countries registering a 17.7 percent year-on-year growth and a record-high net profit of 232.8 billion won last year.

According to market sources, Shinhan posted a net profit of 249.7 billion won ($188 million) in 2023, up 6.7 percent from a year earlier.

While the Vietnam entity experienced a robust growth of 17.7 percent, the poor performance of its peers in Cambodia and Indonesia more than offset this. Shinhan Bank Cambodia registered a net income of 9.3 billion won, dropping 60.6 percent from the previous year, while Shinhan Bank Indonesia achieved a net income of 7.6 billion won, down 39.7 percent.

Shinhan entered Vietnam in 1993 and has since experienced exponential growth. Its total assets now amount to $7.4 billion, while net profit reached $185.5 million.

About 10 percent of the Shinhan Bank’s total income comes from the Southeast Asian country.

“We plan to open three more branches in Vietnam, raising the total to 54,” a Shinhan official said.

Woori Finance Myanmar’s net income came to 2.4 billion won in 2023, up 26.3 percent from the year before.

However, the bank’s Indonesia, Cambodia and Vietnam entities registered a year-on-year drop of between 5 percent and 57.9 percent in net income during the same period.

Worse yet, Woori Wealth Bank Philippines began to register a net loss.

Hana’s Indonesian entity, PT Bank KEB Hana, posted a net income of 38.1 billion won in 2023, down 26.2 percent year-on-year.

Hana saw a 23.6 percent decrease in net income at the Bank for Investment and Development of Vietnam (BIDV). Hana holds a 15 percent stake in the Vietnamese state-owned bank, as agreed upon in an equity investment signed in 2019.

KB Kookmin was able to reduce its net loss to 53.7 billion won in 2023, narrowing significantly from the previous year’s 292.2 billion won.

KB Bank Myanmar and KB Microfinance Myanmar registered a respective net income growth of 3.5 billion won and 400 million won, emerging from years of net losses.

PT Bank KB Bukopin’s net loss stood at 173.3 billion won, substantially narrowing from the previous year’s net loss of 537.2 billion won.

“The outlook for our Southeast Asian business will pick up throughout this year and next,” a KB official said.