Domestic Banks' Overseas Branch Assets Increased but Net Profit 'Decreased'

China's Net Profit Drops 93.8%
Indonesia Also Sees Widening Deficit

Last year, the asset size of overseas branches (local subsidiaries and branches) of domestic banks increased, but net profit decreased. In particular, the net profit of branches in China sharply declined, and losses in Indonesia expanded.

According to the management status data of domestic banks' overseas branches released by the Financial Supervisory Service on the 12th, the total assets of domestic banks' overseas branches amounted to $203.14 billion, an increase of $19.92 billion (10.9%) compared to the end of the previous year.

The total asset size of overseas branches by country was in the order of the United States ($32.62 billion), China ($31.36 billion), Hong Kong ($25.86 billion), and the United Kingdom ($20.17 billion). The total assets of overseas branches located in the United States, Vietnam, Singapore, and others increased. The non-performing loan ratio of overseas branches was 1.5%, down 0.38 percentage points from the end of the previous year.

Last year, the net profit of overseas branches was $991 million, a decrease of $174 million compared to the previous year. Due to the cumulative impact of rising interest rates, interest income increased by $415 million, but non-interest income decreased by $43 million and loan loss expenses increased by $420 million, resulting in a reduction in net profit.

By country, net profit increased in most countries such as the United States, Japan, and the United Kingdom, while net profit decreased in China and Indonesia. In China, net profit decreased by $135 million compared to the previous year, and in Indonesia, the deficit expanded from a $176 million loss in 2021 to $507 million last year.

The return on assets (ROA) was 0.49%, down 0.15 percentage points from 0.64% the previous year. The comprehensive evaluation grade of localization indicators for domestic banks' overseas branches last year was '2+', the same as the previous year.

As of the end of 2022, the number of overseas branches of domestic banks was 207, an increase of 3 from the end of the previous year, and the number of countries entered also increased by one. Last year, 7 branches were newly established and 4 branches were closed, resulting in a net increase of 3 branches. New branches were established in six countries including Singapore, China, Hong Kong, Australia, Vietnam, and Taiwan.

Looking at the detailed changes, Hana Bank entered Taiwan by establishing a branch for the first time among domestic banks. In addition, the Export-Import Bank of Korea established a local subsidiary in Singapore, NongHyup Bank established branches in Australia and China, KB Kookmin Bank in Singapore, and the Korea Development Bank in Hong Kong. Jeonbuk Bank opened an office in Vietnam. Shinhan Bank closed its local subsidiary in Indonesia, and Industrial Bank of Korea closed offices in Indonesia and Myanmar.

By country, Vietnam had the most overseas branches with 20, followed by China (17), the United States and Myanmar (16 each), and Hong Kong and Cambodia (11 each). By region, Asian branches totaled 143, accounting for 69.1% of all overseas branches, and Southeast Asian branches totaled 70, accounting for 33.8%.

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