Review of Overseas Business Operations of Korean Financial Companies in 2017
Korean financial firms have been expanding their business operations abroad amid the growing maturity of the domestic market. As of the end of 2017, the number of their overseas presences increased by 24 year on year to 431 in 43 countries. The total figure was broken down into 185 for banking, 115 for financial investment, 85 for insurance, 44 for credit finance and 2 for financial holding companies. The numbers of overseas offices of banks and credit finance companies have been on a steady increase over the past several years as they seek to find new growth opportunities and diversify their profit streams.
Asia is the most sought-after region for Korean financial companies, with 299 branches out of 431 (69.4 percent) located in the region including China and Vietnam. The Americas and Europe account for 17 percent and 9.7 percent respectively. Southeast Asia in particular has been attracting a number of Korean financial businesses as its financial markets have a huge growth potential. Developing countries in that region have seen demand for financial services grow rapidly in step with infrastructure development and the expansion of the middle class.
More than 68 percent of the total overseas operations are subsidiaries and branches, which engage in revenue-generating business activities. Banks set up their overseas presences mostly in the form of branches while insurers have more representative offices than branches. In the past, Korean financial companies would go abroad together with their major business clients such as local manufacturers and do business mostly with them. These days, however, many of them are expanding their international business through M&A deals with local financial companies so that they could target local customers and provide corporate and retail financial services to a broader customer base.
The total assets held by overseas operations of domestic financial firms increased by 81.3 percent over the past five years to USD 157 billion in 2017. Their net income for 2017 totaled USD 934.1 million compared to USD 657.4 million in 2016. A breakdown of the total assets by geography shows 57.4 percent for Asia, 31.4 percent for the Americas and 10.2 percent for Europe. The share of Asia in terms of net income was much higher at 79.8 percent, followed by 10.9 percent for Europe and 7.6 percent for the Americas.
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