Financial institutions struggle abroad

Seven of 10 financial firms that entered overseas markets are not making as much profit as they expected, a survey by the Korea Chamber of Commerce and Industry (KCCI) showed yesterday.

The business lobby surveyed 72 companies and 69.4 percent of respondents said the volume of last year’s overseas profit accounted for less than 3 percent of total sales. Only 2.8 percent said their overseas profit was 10 percent or more of total sales last year.

“Local financial institutions have aggressively sought global expansion to diversify revenue sources and secure a new growth engine, but they haven’t yet made tangible results because they find sales difficult because of other countries’ financial regulations,” said Kwon Hyuk-boo, an official at the KCCI.

Financial institutions say the lack of information is the biggest hardship they face when opening offices abroad.

As a result, companies sought strategic partnerships with financial institutions in target markets (39.1 percent), equity investment in financial institutions in target markets (11.3 percent) and joint-ventures (4.9 percent), the survey showed.

The KCCI called on the government to actively support Korean financial institutions entering overseas markets by granting funds for M&A deals and providing information, among other measures.

“Financial institutions need to diversify target areas because they are concentrated in Asian countries like Vietnam and China,” Kwon said.

By Kim Mi-ju [mijukim@joongang.co.kr]