Korean financial firms prosper in Vietnam

A growing number of financial companies of South Korea are showing signs of extended profit in Vietnam after years of a downturn brought on by the Covid-19 pandemic, market watchers have said, elaborating that they include Woori Bank, Hanwha Life and Lotte Card.

The success of financial companies is attributable to target-specific localization and strong communications efforts with employees in the Southeast Asian country, a basis for a deeper understanding of corporate and retail customers’ needs.

Woori Bank said that Woori Bank Vietnam, its corporate entity in the Southeast Asian country, provided KRW 6.5 billion ($4.69 million) in dividends last year, accounting for 10% of the subsidiary’s net income in 2023. Woori opened its Hanoi branch in 1997 and has since expanded its network of businesses throughout 26 locations nationwide.

Woori Bank Vietnam accounted for one-sixth, or 16.4% of Woori Bank’s overseas operation net income. This is a significant portion of Woori’s total overseas business portfolio, since the bank aims to draw 25% of its net income from overseas businesses by 2030.

The Vietnamese entity registered an all-time high net income of $48.96 million in 2022. The figure has down slightly to $45.70 million in 2023, but had steady strong growth from $2.16 million in 2017.

It signed an agreement with two leading local payment and settlement platforms, VNPAY and ZaloPay, in the first half of this year. The entity is a party to a three-way business partnership whereby QR-based services for Vietnam-Thailand transactions will be available.

Lotte Finance Vietnam, a subsidy of Lotte Card, registered a profit of 500 million KRW last month, ending six years of consecutive losses since 2018, when the Korean card issuer acquired Techcom Finance, a Vietnamese consumer finance service provider, to establish the Vietnamese entity.

The success was driven by the development of a comprehensive credit rating system, followed by the introduction of diverse borrowing rates tailored to creditworthiness. It also offered a variety of loan products including unsecured loans, auto loans and payment services which resulted in the fact that Lotte's Vietnamese entity having its low-credit borrowers outnumbered by their high-credit peers.

Hanwha Life’s Vietnamese subsidiary paid dividends of about KRW 5.4 billion early this year, the first for any overseas entities of Korea’s life- and non-life insurers combined.

The Vietnamese entity was established in 2008 and remained unprofitable for the next decade. However, it turned a profit in 2019, and has since generated strong earnings. Its net income from 2019 to 2023 totaled KRW 117.8 billion. All employees of the entity are from Vietnam, except three including the firm's head. It aims to make the list of the top five insurers in the Southeast Asian country by 2030.