The Financial Supervisory Service is expected to start a regular examination of iM Financial Group and iM Bank next month, as reported on the 28th. This will be the first regular examination since Lee Chan-jin took office as the head of the Financial Supervisory Service, drawing attention from the financial sector regarding the intensity and scope of the inspection.
This regular examination is said to be scheduled for six weeks, starting on the 8th of next month. The FSS is currently conducting preliminary assessments.
iM Bank will undergo its first regular examination since converting from a local bank to a commercial bank in May of last year. The FSS is expected to focus on whether iM Financial Group and iM Bank have appropriately set their management goals since the transition to a commercial bank.
Examinations of the institutional sector's soundness are also expected. As of the end of the second quarter, iM Bank's loan delinquency rate was 0.93%, about 2.8 times higher than the average delinquency rate of the four major commercial banks (KB Kookmin, Shinhan, Hana, and Woori Banks) at 0.34%. The ratio of non-performing loans (loans overdue for more than three months) increased from 0.76% at the end of the first quarter to 0.94% at the end of the second quarter.
Recent illegal loans that have been occurring in the banking sector will also be subject to inspection. The FSS announced in February of this year cases of fraudulent loans discovered during regular examinations of commercial banks last year. The FSS decided to sequentially check whether similar fraudulent loans occurred through future regular bank examinations.
There is also a prospect of examining whether there has been excessive household loan marketing. Since converting to a commercial bank last year, iM Bank sold housing mortgage loans at the lowest fixed interest rate of 3.25% annually in the banking sector. This led to a surge in demand for mortgage loans, causing a rapid increase in household loans, even resulting in 'open runs'.
There are expectations in the financial sector for a high-intensity inspection since this is the first regular examination conducted after the appointment of the new head. However, it has been reported that the head emphasized 'financial consumer protection' after receiving reports from various sectors but did not provide separate instructions regarding the inspection methods. Therefore, it seems there will not be significant changes in the inspection methods for iM Financial Group and iM Bank.