Why Vietnam is tough for Korean card firms to crack

Shinhan Card headquarters in Seoul / Courtesy of Shinhan Card

Shinhan Card and Lotte Card, which had both ventured into Vietnam in search of a new growth driver, are now struggling with annual losses due mainly to the prolonged high interest rates wreaking havoc on the local economies of the Southeast Asian country. In response, both credit companies have been focusing on digital solutions as strategies to attract young customers.According to the latest data on the state-run electronic disclosure system, Shinhan Card and Lotte Card’s Vietnamese operations posted net losses of 5.2 billion won ($3.7 million) and 3.5 billion won, respectively, for the first quarter of this year.Shinhan Vietnam Finance (SVFC), the card company’s subsidiary there, turned to a deficit last year, logging an annual loss of 4.4 billion won.

Since being incorporated as an affiliate of Shinhan Card in 2019, SVFC had successfully operated loan products targeting high-credit customers in major cities like Ho Chi Minh City and Hanoi. It achieved a net profit of 18.3 billion won in 2019, and had since recorded net profits consistently: 22.7 billion won in 2020, 6.5 billion won in 2021 and 17.3 billion won in 2022.The card company’s rosy outlook in the Vietnamese market changed last year, however, due to the downturn of the local economy that depends heavily on exports.With Vietnam’s total trade volume hitting a three-year low last year, local customers, most of which are working in manufacturing industries directly related to the volume of international trade, suffered deteriorating repayment ability, which in turn led SVFC’s performance to 슬롯게이밍 plummet

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