Expanding Business Network Through Localization
NH Nonghyup Bank succeeded in turning a profit in two years after pushing into Myanar’s banking market.
Nonghyup Finance Myanmar, the bank’s subsidiary in Myanmar, recorded a net profit of 572 million won (US$504,630) last year, according to the bank on April 15.
NH Nonghyup Bank entered the microfinancing market in Myanmar at the end of 2016 and has since been seeking to expand its business network through localization. In 2017, it posted 480 million won (US$423,470) in net loss. Yet, the bank was able to make a profit last year amid a growing demand for small loans.
While most local financial firms give out loans with a 30 percent interest rate a year, Nonghyup Finance Myanmar has lowered the annual interest rate to 24 percent to reduce the burden of borrowers. The bank’s loan balance had tripled from 2.30 billion won (US$2.03 million) at the end of 2017 to 7.30 billion won (US$6.44 million) at the end of last year.
NH Nonghyup Bank’s subsidiary in Cambodia also showed a remarkably good performance. The bank established the Cambodian branch last year by acquiring a local financial firm. The total assets of Nonghyup Finance Cambodia came to 22.10 billion won (US$19.50 million) as of the end of last year, which was a little more than Nonghyup Finance Myanmar’s 21.70 billion won (US$19.14 million). The Cambodian branch is the bank’s first overseas subsidiary set up through the acquisition of a local firm. An official from NH Nonghyup Bank said, “We will add more branches in Myanmar and Cambodia. We are also planning to start specialized businesses that only Nonghyup can run, such as agricultural policy financing and agricultural machine-related financing.”
Based on this, the bank is aiming to expand its global business to Southeast Asia. To this end, the bank is planning to open a Ho Chi Minh branch in Vietnam and is considering making an equity investment in the country’s largest state-run bank, Agriculture and Rural Development (Agribank).
NongHyup Financial Group chairman Kim Gwang-soo has come up with plans to raise the proportion of its global business in the total net profit from the current 3 percent to 10 percent by 2022.