It has been found that the household loan balance of Saemaul Geumgo has remained at around 30% for five consecutive years. There are criticisms that Saemaul Geumgo, which was originally established to support financial services for the common people, is not fulfilling its intended role properly.
According to the Bank of Korea, as of June this year, the household loan ratio in the total credit balance of Saemaul Geumgo was 34% (61.7 trillion won). While this is an increase from last June (32%), it has remained at a similar level since the ratio dropped to the 30% range in 2021 (37.5%). Until 2019, the household loan ratio of Saemaul Geumgo was between 50% and 70% since the Bank of Korea began compiling data in 2007.
The reason for the reduction in household loans at Saemaul Geumgo is the increase in corporate loans centered around real estate project financing (PF). Saemaul Geumgo significantly increased related corporate loans during the real estate boom from 2020 to 2022.
At that time, Saemaul Geumgo was the only financial institution to handle a product called 'managed land trust project financing loan', which packages from bridge loans (PF in the land acquisition stage) to main PF loans. The balance of Saemaul Geumgo's managed land trust loans surged to 15.5 trillion won in 2022, compared to 169.4 billion won in 2019, an increase of over 15 trillion won. Managed land trusts mean that the trust company becomes the implementing company, but the sourcing of project expenses is done by the entruster or construction company. Loans for these are land acquisition cost loans, which can broadly be classified as real estate PF loans along with bridge loans.
Afterwards, as a real estate market recession set in, the delinquency rate related to Saemaul Geumgo's real estate PF loans began to rise significantly. The delinquency rate of Saemaul Geumgo was around 2% until 2021, but according to the first half of this year, it soared to 8.37%. For the first quarter of this year, the scale of non-performing PF loans in mutual finance reached 11.3 trillion won, which is about 52% of the total, and financial authorities believe that a significant portion is related to Saemaul Geumgo.
There are concerns that Saemaul Geumgo's actions do not align with the purpose of mutual finance aimed at providing financial services for the common people. Last year, Kim In, chairman of the Saemaul Geumgo Central, said, "Although difficult management conditions continue, we will continue to strive to expand the supply of financial services for the common people by actively handling policy loan financing and contributing to secure policy finance guarantee resources."
In terms of soundness management and fulfilling social responsibility, there is an urgent need to increase the household loan ratio instead of corporate loans, but this has become difficult due to government pressure. Due to the recent three-stage stress total debt repayment ratio (DSR) and the 6/27 measures to strengthen household debt management, there is a high possibility that loan demand will shrink.
A source from Saemaul Geumgo stated, "We are working hard to fulfill our inherent role in providing financial services for the common people" and noted, "However, it is currently difficult to increase household loans, so we are focusing on reducing corporate loan balances."