One Year Since Myanmar Coup... Card Industry Struggles in Local Market

Domestic Food Industry Missing in Card Sector, Southeast Asia Expansion Expected to Accelerate

[Asia Economy Reporter Yu Je-hoon] About one year after the military coup in Myanmar, domestic credit card companies operating locally are struggling. However, since growth momentum is limited due to intensified competition in the domestic market, expansion into other Southeast Asian markets besides Myanmar is accelerating.

According to the Financial Supervisory Service's electronic disclosure system on the 14th, Woori Card's local small credit loan subsidiary, 'Tutu Microfinance,' recorded assets of 28.138 billion KRW and net income of 776 million KRW in the third quarter of last year. Compared to the same period last year, asset size decreased by 23.9%, and net income dropped by 73.8%.

Following Woori Card, Shinhan Card, which launched Shinhan Microfinance locally in Myanmar, also posted poor results. During the same period, Shinhan Microfinance recorded assets of 12.63 billion KRW and a net loss of 9.497 billion KRW. Assets decreased by 61.7%, and net income turned to a deficit.

The cause of the credit card companies' struggles in Myanmar is attributed to the political turmoil following last year's military coup. Since the coup, civil protests have escalated into conflicts resembling a civil war. An industry insider stated, "As the coup and political instability continue, not only business activities but also overall operations such as local government approvals are not progressing at the expected pace."

However, expansion into other Southeast Asian markets, where political instability is less severe, is expected to accelerate further. In fact, Woori Card recently entered the local market by acquiring an installment finance company in Indonesia, and KB Card's Thai subsidiary, KB Jay (J) Capital, acquired an A- credit rating from a local credit rating agency, building its business foundation. There are also moves to expand business in Myanmar. Despite the political instability caused by the Myanmar coup, Woori Card is seeking a comeback by planning to add installment finance business.

A financial industry official said, "Although there are various risks, the Southeast Asian market still has great development potential and interest rates are attractive, comparable to Korea’s high-growth period in the 1970s and 1980s. As domestic market opportunities diminish, the southward expansion of specialized credit finance companies will continue for the time being." Reporter Yu Je-hoon kalamal@

This content was produced with the assistance of AI translation services.