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Deutsche Financial Provides Another Multi-Billion Won Loan to Loss-Making Cambodian Subsidiary… What’s the Reason?

[비즈한국] It has been confirmed that Deutsche Financial, a subsidiary of Deutsche Motors067990, recently provided a loan of 2.93252 billion won to BAMC Finance PLC in Cambodia. BAMC is a Cambodian microfinance service provider acquired by Deutsche Financial in 2023. Although Deutsche Financial has invested tens of billions of won in BAMC, the entity has been posting losses for several years.

Deutsche Financial acquired BAMC in 2023 for 4.39 million USD (approximately 5.7 billion won based on the exchange rate at the time). This accounted for more than 20% of its 27.8723 billion won in cash and cash equivalents as of the end of 2022. Since then, Deutsche Financial has also carried out several capital increases for BAMC. The total amount invested in BAMC to date has reached 24.5 billion won, which is a significant sum considering the scale of Deutsche Financial's business.

However, it was confirmed that in March of this year, Deutsche Financial provided an additional loan of 2.93252 billion won to BAMC. As of the end of last year, Deutsche Financial held 25.13705 billion won in cash and cash equivalents, meaning a substantial amount of its liquidity was loaned to BAMC. Furthermore, recent performance has been less than stellar. Deutsche Financial recorded a net loss of 400 million won in 2024, shifting to a deficit, and while it posted a net profit of 700 million won in 2025, the profit scale remains small compared to the past.

The reason Deutsche Financial continues to invest in BAMC is interpreted as being rooted in expectations. Kwon Hyuk-min, Vice Chairman of Deutsche Auto Group, expressed his optimism at the time of the acquisition, stating, "We plan to use the acquisition of BAMC to make Phnom Penh, Cambodia, a hub for introducing Deutsche Auto Group’s successful automotive financial business model across the Southeast Asian market." He added, "Although the market size is small, we judged Cambodia, which is growing dynamically, as an optimal environment to integrate the Deutsche Auto Group’s automotive-related financial system."

Currently, Vice Chairman Kwon Hyuk-min serves as a non-executive director at Deutsche Financial, and he also acts as the Chairman of the Board for BAMC Finance. Vice Chairman Kwon Hyuk-min is the eldest son of Deutsche Motors Chairman Kwon Oh-soo. This suggests that the owner family's intentions may be reflected in Deutsche Financial's lending of funds to BAMC.

Contrary to expectations, BAMC’s performance is sluggish. It recorded operating losses of 1.1 billion won and 700 million won in 2024 and 2025, respectively. Last year's revenue was approximately 2 billion won, which is only 0.08% of Deutsche Motors' consolidated annual revenue of 2.5491 trillion won. If BAMC fails to turn a profit, further support from Deutsche Financial may be required.

Above all, some evaluate that there is great uncertainty surrounding BAMC because the business environment in Cambodia is not stable. Cambodia saw issues related to organized crime emerge last year and also experienced armed conflicts with Thailand. In December of last year, the Ministry of Foreign Affairs advised Korean residents in border areas between Thailand and Cambodia to evacuate.

However, Deutsche Motors still holds expectations for BAMC. A Deutsche Motors official stated, "The funds were loaned as necessary operating capital to expand BAMC's business, and we plan to increase the amount further depending on future business conditions," adding, "BAMC has transformed into a specialized institution for automotive finance and is handling automotive loans professionally. The scale of losses is not as concerning as feared and is continuing to shrink. There are also projections that it could turn to profit starting in July of this year." Amid various concerns, attention is focused on whether BAMC can lead a performance rebound.