Money Rolling In
The overseas performances of major commercial banks have improved in the first half of this year. The improvement in performance in China and Southeast Asian subsidiaries has supported this trend.
In the first half of this year, the four major commercial banks collectively recorded a net profit of 604.5 billion won (US$450.11 million) from their overseas subsidiaries. Compared to 419.8 billion won in the same period last year, this represents a 44.0 percent increase. Kookmin Bank, which achieved explosive growth with its net profit increasing by approximately 2.5 times, led the way, and all banks saw improved performances.
This significant increase is primarily attributed to the sharp rise in net profits from Chinese subsidiaries. The improvement in the business environment within China, which had been under lockdown measures since the onset of COVID-19, has been a noticeable trend in recent times.
Kookmin Bank’s Chinese subsidiary, which reported a deficit of 9.7 billion won in the first half of last year, returned to profitability in the first half of this year with a net profit of 23.1 billion won. Among the foreign subsidiaries owned by Korean banks Hana Bank (China) Limited achieved the highest growth rates with 172.5 percent and 70.4 percent, respectively.
Shinhan Bank China Limited also reported a net profit of 30.2 billion won in the first half of this year, marking a 12.6 percent increase compared to 26.9 billion won in the same period last year.
South Korean banks have also attained favorable growth in the Southeast Asian region where they have a significant presence. Kookmin Bank operates overseas subsidiaries in Cambodia, Myanmar, and Indonesia. Shinhan Bank has subsidiaries in Cambodia, Vietnam, and Indonesia. And Hana Bank operates in Indonesia. Woori Bank also has subsidiaries in Indonesia, Myanmar, the Philippines, Vietnam, and Cambodia.
In these regions, the net profit earned by the four major South Korean commercial banks increased by approximately 30 percent, from 254.3 billion won in the first half of last year to 331.7 billion won in the first half of this year. Due to the overall improvement in overseas performance, however, the proportion of net profits from subsidiaries in the Southeast Asian region in the total net profit of overseas subsidiaries decreased from 60.6 percent in the first half of last year to 55.0 percent in the first half of this year.
By individual banks, Kookmin Bank’s net profit in the first half of this year stood at 114 billion won, showing an overwhelming growth rate of 166.8 percent and an impressive increase in net profit of 71.3 billion won. In the first half of last year, it was at the bottom among the four major commercial banks, but this year, with the improved performance of all overseas subsidiaries except the one in Cambodia, it surpassed Hana Bank with 77.8 billion won. Kookmin Bank has a significant dependence on its Chinese performance as it only has its subsidiaries in Southeast Asian countries like Cambodia, Myanmar, and Indonesia, and China. Kookmin Bank Bukopin, the “problematic” subsidiary in Indonesia, also recorded its first profit of 8.4 billion won.
In terms of scale, Shinhan Bank has maintained its stable position as the top performer, recording 260 billion won in profits, with a diverse presence extending to regions including South America and Central Asia. In the first half of this year, its net profit increased by 34.9 percent compared to 192.8 billion won during the previous year, widening the gap with second-placed Woori Bank with 152.7 billion won. Among the four major commercial banks, Shinhan Bank is the only one with a presence in Central Asia, and its subsidiary, Shinhan Bank Kazakhstan, saw its net profit increase by about 7.5 times compared to the previous year from 3 billion won to 22.6 billion won. In addition, the performance of Shinhan Bank subsidiaries in Canada and Mexico also grew significantly with year-on-year increases of 436.0 percent and 241.6 percent, respectively.