Top 4 financial groups’ shaky loans amount to $1.5 billion
The country’s top four financial groups are expected to register at least 2 trillion won worth of ($1.5 billion) combined unrecoverable loans, caused by soaring delinquency rates due to high borrowing costs, data showed Tuesday.
Most at play was an overall uptick in delinquency rates amid the tightening of credit review standards for both retail and corporate borrowers. Also factored in were heightened uncertainties concerning the overseas real estate market. Project financing woes also had follow-on effects.
According to market data, the presumed lost loans of the four banks — KB, Shinhan, Hana and Woori — came to an all-time high of 1.96 trillion won last year, up 48.8 percent from a year earlier. The record figure pushed up their total combined non-performing loans to over 7.9 trillion won in the same period. A loan is non-performing if interest payments are 90 days past due and therefore considered unlikely to be repaid.
The figure for KB Financial is likely to come to 392.6 billion won, up 84.9 percent from the year before.
Shinhan, Hana and Woori registered respective year-on-year increases of 30.5 percent, 46 percent and 60.7 percent. Their 2023 figures stood at 751.4 trillion won, 343 billion won and 479 billion won.
NongHyup Financial did not disclose its figure. Its bank subsidiary NongHyup Bank’s figure jumped 13.2 percent to 133.5 billion won, up from 117.9 billion won over the same period.
KB Financial said the surge in shaky loans resulted from deteriorating overall financial soundness, as exacerbated by the declining asset quality of loans granted to low-income and low-credit borrowers.
The presumed loss of the group’s bank subsidiary KB Kookmin Bank surged to 180.1 billion won as of last year, double the 86.5 billion won a year earlier.
Shinhan Financial’s card subsidiary reported greater losses than anticipated, compounded further by its brokerage subsidiary’s reorientation of its investment portfolio to a better price in project financing woes.
Hana Financial said that the increase reflects overall tightening of financial conditions within the country and overseas, as evidenced by higher delinquency rates for retail and corporate borrowers as well as contagion exposure in the commercial property markets here and abroad.
Woori Financial ascribed the figure to the troubled builder Taeyoung Construction’s debt restructuring risks, delinquencies of overseas corporate entities, real estate project financing businesses and credit card firms.
The four groups raised a combined 8.99 trillion won to bolster loss reserves last year, up 73.7 percent from 2022. It was part of efforts to enhance risk management, alongside early review and detection of vulnerable borrowers and the prompt recovery of loans granted to businesses with dwindling financial profiles.