The Korea Herald


Woori, BC improve profits in overseas card business

By Choi Ji-won

Published : Jan. 17, 2024 - 18:07

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Mastercard and Visa (Getty Images) Mastercard and Visa (Getty Images)

As local card issuers struggle to seek new growth engines on foreign ground, a handful saw improvements in 2023.

Making a surprise breakthrough overseas last year was Woori Card, which posted a cumulative net profit of around 6.25 billion won ($4.64 million) as of the third quarter through its foreign subsidiaries in Myanmar and Indonesia. The figure was up by almost 78 percent on-year.

Driving the flourish was Woori Finance Indonesia, the Korean card company's newly launched Indonesian corporation, which registered a cumulative net profit of 4.49 billion won in the period. Woori's figure outpaced even the 4.19 billion won logged by Shinhan Card, the local leader in the overseas card business in Indonesia.

Woori's Myanmar office, Tutu Finance-WCI Myanmar, also recorded an increased net profit of 1.75 billion won, up almost 60 percent on-year.

The situation was not so bright overall. As of the third quarter last year, accumulated net profit for Korea‘s six card firms operating overseas -- KB Kookmin, Shinhan, Woori, BC, Hana and Lotte -- was around 25.6 billion won in total, down by almost 40 percent from the previous year.

KB Kookmin Card, the card arm of the nation's top finance firm KB Financial Group, saw its overall net profit as of September drop by almost 40 percent on-year to 12.1 billion won. KB runs four offices in Cambodia, Indonesia and Thailand.

The company attributed the downturn to unstable economic and political situations in the region.

"The Southeast Asian countries are largely affected by China's economic situation, and geopolitical factors have also added to the uncertainty," an official from KB Kookmin Card told The Korea Herald on Wednesday.

The KB card subsidiary said it is opting for quality over quantity this year in its global business.

"At such time as now when the economy is bad, we pursue stability and focus on building a robust fundamental, rather than trying to expand aggressively," the official noted.

Shinhan Card -- the Korean card company with the biggest foreign network, spanning Indonesia, Kazakhstan, Myanmar and Vietnam -- saw contrasting outcomes in different countries.

The company's biggest foreign corporation in Vietnam saw its net profit in the third quarter drop 64 percent on-year, contributing substantially to the overall 27 percent fall of Shinhan Card's overseas net profit in the same period.

Offsetting the loss from Vietnam was Shinhan's vigorous advancement in Kazakhstan and Indonesia. Shinhan Card's Kazakhstan branch saw its net profit more than double as of September from the previous year, while the Indonesian corporation registered a 26 percent increase.

"In the case of Kazakhstan, we recently set up a joint venture with a local company and have been boosting our presence inside the auto and microfinance markets. In Indonesia, we've been expanding our business in relation to heavy industries," an official from Shinhan Card explained.

The official added the company will continue its drive for overseas growth this year.

"The domestic card market has been long saturated. We need to keep on finding new sources of money, and global operations play an essential role here."

BC Card, the financial services arm of telecommunications giant KT, saw its global business swing into the black last year. According to reports, the card issuer logged 287 million won in net profit in the third quarter, making a turnaround from a deficit of 557 million won in the previous year.

The recovery is largely attributable to the company's push in Asia, especially Central Asia. Last January, where it clinched a strategic partnership deal with Mongolia's central bank to build a network-to-network payment system and establish a financial digital infrastructure. It signed similar partnerships with Kyrgyzstan and Uzbekistan later in the year.

BC Card also operates subsidiaries in China, Vietnam and Indonesia and established a joint venture in Kyrgyzstan last year with the nation's state-run payment provider Interbank Processing Center and Korean payment services firm Smartro.

Also seeing a rebound in business abroad last year was Lotte Card. While the firm's global business continues to be in a deficit, it narrowed from 10.11 billion won to 8.73 billion won on-year as of September.

Meanwhile, Hana Card, the only local card issuer operating in Japan, is still struggling to get a foothold in the country. Failing to obtain its operation license from Japanese authorities, the company's Japanese arm, Hana Card Payment, saw its deficit level sink further last year.