President Kwon Kwang-seok of Woori Bank. (Photos: Woori Bank)

Woori Bank will invest 110 billion won ($100 million) in Indonesia's Bank Woori Saudara. Its strategy is to strengthen the bank’s digital finance to increase its influence over the rapidly growing Indonesian market.

According to sources in the financial industry on July 15, Bank Woori Saudara held a shareholders' meeting the previous day and passed a paid-in capital increase plan to increase the number of shares.

Woori Bank has a 79.9 percent stake in Bank Woori Saudara as the largest shareholder and will participate in the capital increase in September.

“We will implement a $100 million paid-in capital increase in Bank Woori Saudara, and based on this, we will push to expand the localization business base and accelerate digital finance,” said an official of Woori Bank.

Woori Bank acquired a 33 percent stake in Sodara Bank in 2013, and merged it with an Indonesian corporation the following year, setting up Bank Woori Saudara. It invested $440 million to help Bank Woori Saudara grow rapidly until last year.

Bank Woori Saudara is considered to have excellent profitability and soundness among foreign banks operating in Indonesia by strengthening retail sales and expanding its customer base.

Due to the aftermath of COVID-19, Bank Woori Saudara posted $100 million in operating profit for three consecutive years despite difficulties such as cancellation of orders from local corporate customers and delayed sales.

Analysts say that a balanced portfolio led mainly by retail finance and corporate finance played a major role in producing such strong business results.

At the end of last year, Bank Woori Saudara met requirements for being promoted to BUKU3 with basic funds of 413 trillion won (5.2 trillion rupiah), so its promotion was officially approved by Indonesian financial authorities in February this year.

Bank Woori Saudara in Indonesia.

Based on this, Woori Bank plans to speed up its penetration of the Indonesia financial market by expanding the scope of its bancassurance business, adding securities and trust services and strengthening local retail finance.

At the same time, Woori Bank is emerging as a strong player in the Asia-Pacific investment banking (IB) market amid the COVID-19 pandemic.

In particular, Woori Global Markets Asia, Woori Bank's only global investment bank, has achieved an international credit rating at the highest level with notable financial arrangement performances and stable business results this year.

In the future, Woori Global Markets Asia is expected to be more aggressive in its overseas IB projects centered on the Asia-Pacific region.

Woori Global Markets Asia posted strong results, including eight global syndication arrangements and eight overseas bond issuance arrangements in 2021 according to sources in the financial industry on June 28.

Major projects carried out by Woori Global Markets Asia include loans to SoftBank, Singapore Airlines’ aircraft financing, Hyundai Heavy Industries’ and Hyosung Advanced Materials' issuance of overseas bonds.

As of the end of March, Woori Global Markets Asia had total assets of $452 million and equity capital of $120 million.

In addition, it recorded a 4.1-percent pre-tax return on equity and 1.1-percent average return on assets over the past one-year period.

Earlier, Woori Global Markets Asia is a company wholly owned by Woori Bank's IB Group, achieving a 6.7-percent pre-tax return on equity and 1.3-percent average net return on assets, the highest-ever business performances since its foundation, in 2019.

Woori Global Markets Asia also came in first in arrangements of Korean companies’ issuance of bonds in overseas countries from 2018 to 2019.

Based on these achievements, Woori Global Markets Asia recently earned an upgrade of its credit rating to A+ (Stable) from Standard & Poor's (S&P).

This is a step up from the A grade a year ago. The upgrade of its credit rating is attributed to the continuous expansion of business operations and improved performances in the global financial market despite the COVID-19 pandemic.

“Woori Global Markets Asia’s international credit rating jumped, injecting fresh vitality into its global IB business,” a Woori Bank official said.

“We will be able to raise funds more easily and efficiently by making good use of our strong IB capabilities and excellent credit rating.”