Last year, the arrears rate of savings banks soared to 8.52%, driving the overall increase in arrears rates. The ratio of non-performing loans overdue for more than three months also exceeded 10%. The continued deterioration of soundness due to the failure of real estate project financing loans is evident.
According to the Financial Supervisory Service on the 21st, the total assets of savings banks stood at 120.9 trillion won at the end of last year, a decrease of 4.5% (5.7 trillion won) from the end of the previous year (126.6 trillion won). This is due to a reduction in corporate loan assets caused by a real estate market slump. Corporate loans were 58.9 trillion won at the end of 2023, but fell to 49.4 trillion won at the end of last year, a decrease of 16.1%. In contrast, household loans increased by 3.8% from 38.9 trillion won to 40.4 trillion won during the same period.
Last year, the net loss of savings banks was 397.4 billion won, reduced from the previous year's loss of 575.8 billion won. This was due to a decrease in funding costs that increased interest income by 59.8 billion won, and a slowdown in the increase of the non-performing loan ratio that led to a decrease in bad debt expenses by 178 billion won.
Last year's arrears rate for savings banks was 8.52%, up 1.97 percentage points from the end of the previous year (6.55%). The arrears rate for corporate loans soared from 8.02% to 12.81%, driving the overall increase in arrears rates. The arrears rate for household loans decreased by 0.48 percentage points to 4.53% compared to the end of the previous year (5.01%).
The non-performing loan ratio rose from 7.75% at the end of 2023 to 10.66% at the end of last year, surpassing double digits. The provision for bad debts ratio was 113.2% at the end of last year, down 0.6 percentage points from the end of the previous year. The capital adequacy ratio (BIS ratio) slightly increased to 15.02% from the end of the previous year (14.35%).
Last year, the total assets of mutual financial cooperatives, including NongHyup, increased by 4.3% to 757.6 trillion won from the end of the previous year (726.5 trillion won). However, the net profit was 1.0556 trillion won, a decrease of 48.2% from the previous year (2.2382 trillion won). This is because the net profit of the credit business division decreased by 933.4 billion won (16.5%) during the same period, recording 4.7312 trillion won. The deficit in the economic business division also slightly rose to 3.6756 trillion won.
The overall arrears rate of mutual financial cooperatives was 4.54% at the end of last year, an increase of 1.57 percentage points from the end of the previous year (2.97%). The arrears rate for household loans rose by 0.38 percentage points to 1.91%, while the arrears rate for corporate loans increased by 2.44% to 6.75%.
The provision for bad debts ratio fell to 119.3%, down from 128.7% at the end of the previous year. During the same period, the non-performing loan ratio also rose by 1.85 percentage points to 5.26%.
The FSS noted, "The overall increase in arrears rates occurred as the debt repayment ability of borrowers weakened due to the delay in economic recovery and the slump in the real estate market," but also added that "efforts to manage arrears have somewhat alleviated the rising trend of arrears, and capital ratios and other loss absorption abilities remain good."
It also added, "This year, in preparation for ongoing domestic and external economic uncertainties, we will encourage soundness improvement through the disposal of non-performing assets such as competitive sales and voluntary sales, while consistently enhancing loss absorption capabilities through sufficient provision for bad debts, capital expansion, and proactive liquidity management."