The Korean Federation of Community Credit Cooperatives (KFCC) posted a net loss of 676.8 billion won in the first half. The deficit continued due to provisions for bad debt to manage soundness, but the size narrowed by 651.9 billion won compared with the same period last year (1.3287 trillion won). The decrease was driven by lower related expense following the sale of loans in arrears and mergers of troubled cooperatives.
The Ministry of the Interior and Safety on the 28th released the "first-half 2026 business results (provisional)" for 1,239 KFCC cooperatives nationwide. As of the end of June this year, KFCC's total assets stood at 273.3 trillion won, down 13.4 trillion won (4.7%) from the end of last year.
Total deposits also decreased by 12.1 trillion won (4.7%) over the same period to 243.2 trillion won. Total loans were 181.8 trillion won, down 1.3 trillion won (0.7%) from the end of last year. While corporate loans fell by 3.3 trillion won (3.3%) to 97.5 trillion won, household loans increased by 2 trillion won (2.4%) to 84.3 trillion won.
The overall arrears rate at the end of June this year was 6.34%, up 1.26 percentage points (p) from 5.08% at the end of last year. However, it was 2.03 percentage points lower than 8.37% at the end of June last year. The net capital ratio, an indicator of capital adequacy, was 7.96%, up 0.05 percentage points from 7.91% at the end of last year. It rose 0.28 percentage points compared with the same period last year (7.68%). It also far exceeded the regulatory ratio of 4%.
Restructuring of troubled cooperatives is continuing. The Korean Federation of Community Credit Cooperatives (KFCC) has been steadily merging troubled cooperatives since July 2023. It merged five in the second half of 2023, 12 in 2024, 25 last year, and 21 in the first half of this year. It plans to merge 30 more by the end of the year.
Deposits declined due to shifts in market funds amid a bullish stock market and limits on high-interest deposit-taking. KFCC deposits fell from 258.4 trillion won at the end of 2024 to 255.3 trillion won at the end of last year, and to 243.2 trillion won at the end of June this year. The Ministry of the Interior and Safety (MOIS) said it is managing to secure sufficient available funds to prevent liquidity problems.
The Ministry of the Interior and Safety (MOIS) said improvements in soundness were helped by the cleanup of loans in arrears through an asset management company, the special management period, and the operation of a dedicated task force (TF).