NH Financial Group will take over a micro financial firm in Cambodia as early as this year, in line with its global expansion plan, Chairman Kim Yong-hwan said recently.
He told reporters at NH Bank’s head office in Tongil-ro, Seoul, that the move is nearly finalized to allow NH Bank to enter Cambodia for financial business soon.
The bank will start its financial operation by loaning small amounts of money to individuals and small businesses in the S.E. Asian country before boosting them substantially depending on the pace of the small loan operation, the chairman said.
The bank will also eye further expansion in other Asian countries such as China, Vietnam, Indonesia and Myanmar and explore the chances to enter other Asian countries like India and Laos for operation.
The bank is in the middle of making moves to secure a license to set up a branch in New Delhi, India, to launch its operation there. The bank has decided to build up its operation in Hong Kong as a base for CIB (corporate investment banking) in Asia and around the world, taking advantage of NH Investment and Securities wholly-owned local subsidiary in Hong Kong.
The chairman said the financial group, with total assets amounting of around 200 trillion won, has been eyeing boosting its overseas operation substantially in the months ahead. The group’s affiliates like NH Insurance, NH Asset Management and others will shoot for increases in their operations overseas with Hong Kong as the beachhead.
A good example is its operation in Vietnam, where NH Bank has a small loan operation that charges only 1.2 pct interest on small loans. The operation has been quite successful, as there have been no default so far, the chairman said. NongHyup Finance Myanmar is considering raising capital to finance its expansion in the region, said Kim Jong-hee, managing director of the bank.
Also, it will invest in equities of banks in Myanmar for strategic partnerships when opportunities arise as the country moves to deregulate laws on foreign bank services in the future. This is in line with its plan to increase the number of branches to seven by the end of this year, from three in the first half of the year, he added.
Launched with $3 million in capital in Yangon last January, NongHyup Finance Myanmar marks Seoul-based NongHyup Financial Group's first overseas bank unit.
It mainly provides microcredit and savings accounts to locals working in the agriculture sector. NongHyup Financial Group Chairman Kim Yong-hwan decided to establish a microfinance unit in Myanmar after visiting and meeting former Myanmar President Thein Sein in 2015.
This was part of the group's long-term vision to become a global agricultural bank by sharing its know-how in financing with developing and underdeveloped economies.
NongHyup seeks to help develop and improve Myanmar's production, distribution, sales and
"In 2018, we are looking to have 12 branches. Given the expected loan growth, we are planning for a capital increase," said NongHyup Finance Myanmar’s head. "Our ambition is to have assets of $10 million in three years in Myanmar, and develop NongHyup's first successful overseas business model."
He noted that it has been providing microcredit of less than 1 million Burmese kyat on average per person in Myanmar.
As Myanmar has restrictions on foreign financial operations given that its financial sector is still underdeveloped, NongHyup will not be able to seek local targets for mergers and acquisitions in the short term.
Its capital market is small and nascent since the Yangon Stock Exchange opened last year. As the economy develops, it is moving toward easing some rules on foreign direct investment. The country has been growing over 7 percent on average per year since 2013.