[비즈한국] As the issue of criminal organizations in Cambodia has recently flared up, eyes are on South Korean companies operating in the country. JB Financial Group maintains the Phnom Penh Commercial Bank (PPCB) as a subsidiary in Cambodia. While Cambodia has historically shown high economic growth, the future outlook is no longer what it used to be. Analysts suggest there are concerns about potential losses at PPCB, which recently recorded a total comprehensive loss.
Significant Contribution to Parent Company Jeonbuk Bank's Earnings
JB Financial Group acquired the Cambodian-based Phnom Penh Commercial Bank in 2016. Currently, JB Financial subsidiary Jeonbuk Bank holds a 50% stake in PPCB, while another subsidiary, JB Woori Capital, holds a 10% stake. The remaining 40% is held by OK Financial Group.
At the time of the acquisition, the financial sector responded positively. In a report from August 2016, Hana Financial Investment (now Hana Securities) stated, "Although the profit contribution may not be large yet, it is highly significant as the group's first overseas network, an acquisition of a local bank, and the tenth-largest bank in Cambodia. The potential to expand business linkages with capital services is also positive."
In fact, PPCB has been making a notable contribution to JB Financial Group. According to Jeonbuk Bank's business reports, PPCB's net profit was 20.2 billion KRW in 2020, 20.8 billion KRW in 2021, 30.1 billion KRW in 2022, 34.4 billion KRW in 2023, and 38.4 billion KRW in 2024. Considering that Jeonbuk Bank's 2024 consolidated net profit was 218.6 billion KRW, the share of PPCB’s performance is not negligible. The fact that it has generated consistent earnings is encouraging, especially given that few South Korean financial companies have succeeded in their overseas expansion.
While most PPCB employees are local Cambodians, a significant number of South Korean staff, including PPCB President Lee Jin-young, are also working there. With the recent rise of criminal organization issues, PPCB is focusing on the safety management of its employees. A Jeonbuk Bank official stated, "There are currently no particular issues at PPCB."
25.2 Billion KRW in H1 Net Profit, Recorded 4 Billion KRW in Total Comprehensive Loss
Setting aside the crime controversy, expectations for the Cambodian market are not what they used to be. Cambodia has historically seen steady economic growth fueled by a younger and cheaper labor force compared to other nations. However, external negative factors this year, such as armed border disputes with Thailand, have led to concerns regarding the economic outlook.
Kenichiro Kashiwase, Deputy Division Chief at the International Monetary Fund (IMF), stated in September, "Trade tensions and the border dispute with Thailand are impacting external demand and tourism, and Cambodia’s economic growth is expected to drop from 6% last year to around 4.8% this year. If trade and conflict tensions escalate more than expected, it will have a further negative impact on exports, tourism, and growth."
If the Cambodian economy fails to grow as it did in the past, PPCB's performance will inevitably decline. Poor performance at PPCB also impacts its parent company, Jeonbuk Bank. Jeonbuk Bank's net profit grew by 3.41% from 112.7 billion KRW in the first half of last year to 116.6 billion KRW in the first half of this year. While net profit increased, it is difficult to call it a remarkable achievement compared to the explosive growth seen by other commercial banks.
PPCB recorded a net profit of 25.2 billion KRW in the first half of this year. On the surface, it is a decent result. However, it simultaneously recorded 4 billion KRW in total comprehensive loss. Total comprehensive income is the sum of a company's net income and other comprehensive income. The fact that PPCB recorded both a net profit and a total comprehensive loss means it suffered a large loss in other comprehensive income. Other comprehensive income refers to potential gains or losses that have not yet been realized as cash. In other words, there are concerns about potential losses at PPCB. Jeonbuk Bank has not released a specific statement regarding PPCB’s total comprehensive loss.