Card Companies' Overseas Subsidiaries See Sharp Profit Increase... Competition Intensifies in New Business Ventures

Clear Increase in Net Profit of Overseas Subsidiaries in the First Half... Accelerated Overseas Expansion

[Asia Economy Reporter Yu Je-hoon] As domestic card companies' overseas subsidiaries show signs of performance recovery, each company is accelerating its overseas expansion. This comes amid the domestic market becoming a red ocean due to merchant fee regulations and competition with big tech companies.

According to the Financial Supervisory Service's electronic disclosure system on the 30th, the half-year net profit of KB Kookmin Card's three overseas subsidiaries (Thailand, Indonesia, Thailand) totaled 12.091 billion KRW, representing an approximately 683% increase compared to the same period last year.

Shinhan Card also saw its half-year net profit from four overseas subsidiaries (India, Vietnam, Myanmar, Kazakhstan) rise by 268% to 11.33 billion KRW. Although the net profit of Shinhan Vietnam Finance, which accounts for the largest share of overseas business, slightly decreased, the significant reduction in net losses of Shinhan Microfinance, which suffered heavy losses last year due to the Myanmar military coup, contributed to this result.

Meanwhile, Woori Card and Hana Card posted results similar to the previous year. Woori Card's Myanmar subsidiary, Tutu Finance, achieved a half-year net profit increase of about 43% to 1.11 billion KRW despite difficulties caused by the coup, and Hana Card's Japanese subsidiary, Hana Payment, recorded a net loss, but the scale was reduced to about one-third compared to the same period last year. However, Lotte Card's Vietnamese subsidiary, Lotte Finance Vietnam, continued to post net losses with a deficit of approximately 9.7 billion KRW.

The net profit and loss scale of these overseas subsidiaries remains minimal compared to the total net profit of seven card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana) in the first half, which was about 1.5 trillion KRW. Nevertheless, card companies have been rushing overseas expansion over the past several years to secure future growth amid merchant fee regulations and competition with big tech.

Going forward, card companies are expected to accelerate their overseas expansion. Shinhan Card recently signed a business agreement with U.S. company FiscalNote to enter the U.S. commercial data consulting market. Shinhan Card plans to provide integrated information services to overseas institutions and companies aiming to enter the domestic market, based on the structured and unstructured big data and data analysis capabilities held by both companies.

Southeast Asia is also one of the key targets for card companies. BC Card recently acquired 'Cranium,' a local Indonesian IT developer that carries out digital projects for numerous state-owned enterprises. Woori Card also welcomed Indonesian local installment finance company 'Batavia Prosperindo Finance' as a subsidiary in June. Lotte Card is preparing to launch a buy now, pay later (BNPL) service in the second half of the year in partnership with an e-commerce company through its Vietnamese local corporation.

A financial industry official said, "Although the scale of overseas business is still small in the overall business, considering that the domestic market is increasingly becoming a red ocean, there is ample room for overseas business expansion. Especially, markets like Southeast Asia are still lagging in the development of payment sectors, making them attractive targets for each company."

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