South Korea’s Shinhan Card Co. launched microcredit service in Myanmar as part of efforts to explore new revenue sources in overseas markets amid dwindling profitability in the local credit market due to falling commission fees.

Shinhan Card said on Tuesday that it began operation of Shinhan Microfinance in Yangon, Myanmar. The Korean credit card operator established the local entity Shinhan Microfinance in Myanmar in March and obtained business license from the country’s financial authorities in July. The new business in the Southeast Asian country will offer small-sized loans to clients in Yangon and Bago.

Shinhan Microfinance also plans to provide installment financing and leasing in small amount after it gains a foothold in the country’s microcredit market. Myanmar has been attracting investments across the world for its high growth potential backed by the population of 56 million and abundant resources, a major reason behind the recent rush of financial institutions into the country. In particular, the small-sized installment financing market looks promising in the country where a majority of its population heavily relies on motorbikes as a means of transportation.

Korean card companies including Shinhan Card, KB Kookmin Card Co., KEB Hana Card Co. and Woori Card Co. have recently accelerated their entry into foreign countries, in particular, Southeast Asian countries, in a move to seek lucrative businesses amid shrinking profitability in the Korean market due to a drop in commission fees.

Shinhan Card has entered Kazakhstan in 2014, offering installment financing, and started to provide installment financing and leasing in Indonesia in 2015. The card company is expected to start a credit card business in Indonesia within this year.

The credit card company also expects synergies from a local branch that its sister company Shinhan Bank is preparing to open in Myanmar. The bank would focus on corporate finance in the Southeast Asian country while the card company will sell microloans to employees of the client firms of Shinhan Bank. This is the first time for a Korean bank and a card company to simultaneously enter a foreign market together.

By Chung Ji-sung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]