KB Financial Group’s Southeast Asian Expansion Faces Challenges: Indonesian Bank Struggles with Losses

KB Financial Group, despite its strong domestic performance and leading position in the Korean banking sector, faces challenges in its Southeast Asian expansion efforts. The group’s Indonesian subsidiary, KB Bank, acquired in 2018, has been struggling with persistent losses for six years. The Indonesian bank recorded losses exceeding 800 billion won last year and failed to improve its performance in the first half of 2023. Other Southeast Asian ventures, such as the Cambodian Prasac Bank and the Myanmar subsidiary, are also experiencing declining profits, attributed to limited service accessibility and insufficient infrastructure. While KB Financial Group Chairman Yang Jong-Hee remains committed to the Southeast Asian market, the ongoing losses in Indonesia raise concerns about the sustainability of these ventures. The group has invested over 1 trillion won in the Indonesian bank, aiming for a turnaround by 2025, but persistent losses and concerns over the local regulatory environment raise questions about the future of these investments. Meanwhile, KB Bank’s poor performance in Southeast Asia has led to a loss of market share to Shinhan Financial Group, which has emerged as a leading financial institution in the region.