Bank chiefs at major commercial banks are stepping up their push into Vietnam, taking President Lee Jae-myung's state visit as an opportunity. In addition to business activities through local subsidiaries and branches set up in the past, they have recently been signing MOUs to strengthen various infrastructure. Still, the fact that most bank revenue comes from interest revenue is seen as a limitation.
According to the financial sector on the 29th, Lee's state visit to Vietnam was joined by KB Kookmin Bank CEO Lee Hwan-joo, Shinhan Bank CEO Jeong Sang-hyeok, Hana Bank CEO Lee Ho-sung, Woori Bank CEO Jeong Jin-wan, and NH NongHyup Bank CEO Kang Tae-young. From the 22nd to the 24th, the bank chiefs carried out schedules in Vietnam and signed several MOUs with local banks, state-owned enterprises, and telecom companies. On the 23rd, Industrial Bank of Korea (IBK) also obtained final approval to establish a local subsidiary in Vietnam for the first time in nine years.
Vietnam has shown vigor, recording an annual economic growth rate of 5% to 8% over the past five years. First-quarter growth this year was 7.83%, beating the market's expectation of 7.6%. Analysts say robust manufacturing (9.7%) and industrial production (9.0%) drove overall growth.
Shinhan Bank was the first to see the potential of the Vietnamese market. In 1993, it became the first among commercial banks to open a representative office in Ho Chi Minh City, and in 2009 it became the first foreign bank to receive approval from the financial authorities for a local subsidiary in Vietnam. As of last year, Shinhan Bank's branches in Vietnam numbered more than 50.
Most of the revenue is interest revenue. In the first half of last year, Shinhan Bank Vietnam's total operating revenue was 4.6 trillion dong (about 257 billion won), of which 3.92 trillion dong (about 220 billion won) was interest revenue. A financial industry official said, "Vietnam's economy is growing rapidly, but a revenue structure centered on interest can swing widely depending on local economic conditions."
Woori Bank is in a similar position. The ratio of interest revenue at its local subsidiary in Vietnam rose from 78.4% in 2023 to 94.3% in 2024. In its recent report, Rebalancing two-track strategy for the era of overseas expansion 2.0 for financial companies, Samjong KPMG noted, "A structure that clings to interest revenue can excessively increase exposure to local economic conditions, exchange-rate fluctuations, and regulatory changes. A shift to a non-interest-revenue-focused business model is needed."