Shinhan Card is preparing to set up a financial outlet in Yangon, Myanmar in the first half of this year , making it the first outlet for a Korean credit card firm in the S.E. Asian country, following its entry into Kazakhstan and Indonesia last year, the company said recently. The operation in Yangon will be its 3rd overseas outlet.
The credit card firm plans to set up the branch by June. Shinhan Card has to establish a wholly-owned subsidiary and register it with the local financial authority before getting a license to engage in micro-financial business.
Myanmar is an attractive country for foreign financial firms to do business in, as it has vast economic growth potential. This year’s growth is projected to amount to more than 8 percent. The country’s population is more than 54 million.
Many foreign financial companies have been operating in the country since 2011 when the host government opened up to retailing by foreign banks.
The card company found out that only 5 percent of the population borrows funds from public financial institutions, while the rest rely on high-interest loans from savings banks, which charge interest rates ranging from 20 to 30 percent per annum. The financial default rate is very low in this society influenced by the Buddhist teaching that financial debts not paid off in this world follow debtors to their graves.
Shinhan Card will start its operations in the regions surrounding Yanggon and Bago, offering small loans charging interest rates ranging from 20 to 30 percent per year on those loans. The company will also cooperate with Shinhan Bank, its affiliate, which earlier got a license to do business in the S.E. Asian country.
In Indonesia, the company will offer financing for the purchase of motorbikes, cars, and other lease financing, through “Shinhan Indo Finance,” a local subsidiary set up by Shinhan Bank. The credit card operation will be kicked off in the second half of this year after selecting the best credit card products for local customers. Officials of the card firm said their target for the credit card operation in Indonesia is to boost growth by 10 percent per year.
Shinhan Card has opened its first overseas branch in Kazakhstan as it seeks to expand into emerging markets away from the saturated domestic market, the card company said Thursday.
"In recent years, Kazakhstan has shown the highest growth among the Common Wealth of Independent State (CIS) countries. Its retail banking market has seen double-digit growth each year; and the country's per-capita gross domestic product has reached $14,000," Shinhan Card Chief Executive and President Wi Sung-ho said in a statement.
Given this, Shinhan Card has good reason to enter the central Asian country, as it has great growth potential in banking and other financial services, he said.
On July 1, Shinhan Finance, wholly owned by Shinhan Card, began operations in Almaty, Kazakhstan. It will focus on auto, heavy machinery and home appliance financing and leasing services for the time being, a company spokesman said.
To operate a credit and debit card business in Kazakhstan, Shinhan Card has to receive approval from the local financial authorities, he said. Shinhan Bank and Shinhan Card are two major affiliates of Shinhan Financial Group.
"As Shinhan Bank already has a presence in the developing country and other Asian countries, Shinhan Finance can share the bank's know-how and experience in operating networks," the spokesman said.
Shinhan Card, the country's biggest card issuer by assets, injected 5 billion won in initial capital into Shinhan Finance and will double it to 10 billion won by early next year, the statement said.
In 2013, Shinhan Card announced the slogan of “BIG to GREAT,” which is the company’s new vision. “BIG to GREAT” is Shinhan Card’s aim to become a great company that is not only No. 1 in terms of market share and customers. “It shows our commitment to offer differentiated services to each customer that means more than just being a credit card company that is loved by many customers,” the company said.
“As part of the Big to GREAT strategy, Shinhan Card is working towards creating new value through the big data management. Since being the industry’s first to establish the Big Data Center, Shinhan Card has strived to achieve the core strategy goals of ‘improving fundamental competitiveness through big data’ and ‘strengthening the new growth engine’. Also, we are reinforcing our leading position in the credit card industry by utilizing the risk management system at the group level and providing the possibility of financial stability.”
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