[Bank Southeast Asia Expansion Record] Hana Bank's Two-Track Entry with Equity Investment and Local Operations... Synergy Also 'Soaring'

Hana Bank Records 120 Billion KRW Equity Method Profit After Acquiring Stake in Vietnam Investment Development Bank
Local Branch and Investment Banking Grow Together

The exterior view of the headquarters of the Bank for Investment and Development of Vietnam (BIDV) in Hanoi, Vietnam (Provided by Hana Financial Group)

[Asia Economy Reporter Minwoo Lee] "The approach of equity investment followed by growing together proved effective."

This is the remark of Director Je-bong Yoo, who has been in charge of local operations since Hana Bank's equity investment in the Vietnam Investment and Development Bank (BIDV). Through various strategic advice, BIDV grew alongside, allowing not only equity investment returns but also synergy effects with Hana Bank's local branches.

Director Yoo explained this in an interview with Asia Economy on the 15th. Previously, in November 2019, Hana Bank purchased a 15% stake in BIDV, Vietnam's oldest bank, for about 1 trillion KRW. This was the largest overseas investment by a domestic bank. Shortly after the investment, the global economy was shaken by the spread of COVID-19, but BIDV remained steady and progressed. Hana Bank’s specialized personnel were dispatched to share various experiences and strategies, growing together.

Yoo, a former Vice President in charge of New Southern and New Northern policies at Hana Financial Group, said, "After signing a business agreement with BIDV, currently 10 people are dispatched," adding, "In fields such as finance, strategy, retail, risk, digital, IT, sales, and sales support, each person worked with a sense of responsibility as co-representatives to contribute to BIDV's growth." As a result, BIDV, which had been focused on corporate loans, transferred Hana Bank’s consumer finance experience, increasing the proportion of personal loan assets by 38% over three years and more than doubling fee income. Last year’s net profit reportedly increased by over 40% compared to the previous year.

This also brought great benefits to Hana Bank. Last year, profits related to BIDV amounted to 120.1 billion KRW (equity method profit), accounting for 23.2% of the total overseas subsidiary profits of 518.5 billion KRW. The valuation gains from stock price increases were also significant. Hana Bank purchased BIDV shares at 26,747 VND per share (about 1,330 KRW, considering ex-dividend price). BIDV’s stock price soared to 49,000 VND on January 25. Although it dropped to 40,500 VND as of the previous day, the yield still exceeds 50%.

The synergy effect with local branches is also considerable. Yoo explained, "Local banks have weak funding for dollar loans, whereas Hana Bank’s local branches focus on dollar loans," adding, "Vietnamese dong loans are difficult to fund or costly, making them challenging. By collaborating between Hana Bank branches and BIDV, the weaknesses of the two currencies are complemented, creating the best combination for customers." While domestic bank local branches face loan limit restrictions, BIDV, with sufficient capital, needed to secure high-quality loan customers, so linking the two brought significant benefits.

Recently, they have been jointly designing BIDV’s future. While continuously reorganizing the organization to establish a swift decision-making structure, they are building next-generation IT systems targeting mobile and digital banking. They have also significantly improved financial risk management systems by adopting domestic bank experiences.

Director Yoo expects that since Vietnam still has a low financial penetration rate, BIDV and Hana Bank can grow further through future collaboration. He said, "With a large population and a long territory, the financial penetration rate itself is around 35-40%," adding, "Especially since systems like personal credit evaluation and personal identification are still insufficient, if both the system and infrastructure improve in these areas, there is ample room for growth."

From Hana Bank’s perspective, Yoo emphasized that rather than simply increasing local branches, it would be more efficient to grow and collaborate with leading local market players. He said, "It is never easy to enter and settle in the local market with the existing Hana Bank method," adding, "Becoming a strategic investor in strong local players and sharing their market share and influence together is also an effective approach."

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