The amount of loan receivables that the four major financial groups judged hard to recover has neared 3 trillion won, expanding to a record high.
According to the fact book released on the 3rd by the four major financial groups (KB, Shinhan, Hana, Woori), the estimated loss at the end of the first quarter reached 2.9963 trillion won. As nonperforming loans have piled up, estimated losses have swelled to just below 3 trillion won. The first-quarter estimated loss of the four major financial groups rose 5.8% from the same period last year (2.8325 trillion won) and 16.8% from the previous quarter (2.5656 trillion won).
Loan receivables held by financial groups are divided into five stages by soundness: normal, precautionary, substandard, doubtful, and estimated loss. Of these, estimated loss is the lowest stage. Claims in which the debtor's repayment capacity is severely impaired and recovery is effectively deemed impossible are included here. Portions that exceed the expected recovery amount among loans in arrears for one year or more, or among credits undergoing default, bankruptcy, or liquidation proceedings, are also classified as estimated loss.
By holding company, KB Financial's estimated loss increased 27.2% from 634.6 billion won at the end of the first quarter last year to 807.2 billion won at the end of the first quarter this year. Hana Financial Group rose 30.3% from 386 billion won to 503 billion won, and Woori Financial Group expanded 12.4% from 735 billion won to 826 billion won. In contrast, Shinhan Financial Group fell 20.1% from 1.0769 trillion won to 860.1 billion won.
In the financial sector, the main causes cited are weakened repayment capacity among borrowers such as self-employed people and small and mid-size companies due to prolonged high interest rates. They also analyze that delays in a real estate market recovery stemming from high oil prices and high inflation are leading to real estate project financing (PF) distress, which is fueling an increase in estimated losses across the financial sector.