The five major financial holding companies are moving in earnest to expand support for microfinance. This aligns with the government's push to broaden inclusive finance and appears aimed at the inclusive finance scores that the financial authorities will announce in the second half.
According to the financial industry on the 24th, Woori Financial Group(316140)'s Woori Smile Microfinance Foundation will open new branches in Gimhae, South Gyeongsang, and Jeonju, North Jeolla, on the 29th. Woori Financial Group contributed 100 billion won early this month to support low-income residents and young people, and plans to establish regional bases to ramp up on-site, hands-on financial support and improve access to microfinance for vulnerable groups in the regions.
The five major holding companies have decided to make additional contributions this year to each company's microfinance foundation and, at the request of the financial authorities, are developing microfinance products that reflect each group's characteristics. Woori Financial Group has chosen on-site small business owners and regional areas as key themes.
The previous day, NH NongHyup Financial Group said it has begun establishing the NH Smile Microfinance Foundation and will complete it within the year. With this, all five major financial holding companies will have microfinance foundations. NongHyup Financial is promoting rural-focused microfinance products with an emphasis on revitalizing local economies.
Hana Financial Group(086790) is targeting low-credit, low-income salaried workers, and KB Financial Group(105560) is preparing specialized products aimed at young delivery riders and platform workers. Shinhan Financial Group(055550) plans to operate a specialized product to help borrowers with vulnerable profiles who have records of faithful repayment get back on their feet.
The financial authorities plan to request streamlining of supply processes and reinforcement of personnel at each foundation in the second half to strengthen the supply of microfinance. Microfinance launched in 2009, but its supply scale has stagnated. In response, the authorities instructed each holding company to leverage its customer base, sales network, and nonfinancial support capabilities to directly identify products that reflect each foundation's characteristics and expand their operations.
These results will also be reflected in the inclusive finance scorecard that the authorities will introduce in the second half. This is why the financial sector is putting as much effort into microfinance as into productive finance. The authorities have signaled incentives to lower contribution rates for those that earn high scores in inclusive finance.