The Korean Federation of Community Credit Cooperatives (KFCC) central association, which recorded a loss of 78.5 billion won in the fourth quarter last year, posted back-to-back profits in the first and second quarters this year. The central association plans to use improved profitability and financial capacity to step up mergers of troubled cooperatives and support for individual cooperatives in the second half.
According to the financial sector on the 4th, the Korean Federation of Community Credit Cooperatives (KFCC) central association posted operating profit of 711.0 billion won and net profit of 591.2 billion won in the first half of this year. First-quarter net profit was 399.1 billion won, and the second quarter also saw a net profit of 192.1 billion won. The central association's annual net profit margin was 7.7% last year, but it was 19.6% in the first quarter and 11.2% in the second quarter this year. The capital ratio also rose from 8.35% at the end of last year to 9.38% at the end of June this year.
The financial structure also improved slightly. As of the end of June this year, the central association's liability stood at 89.218 trillion won, down 11.6822 trillion won from the end of last year. Capital came to 9.2396 trillion won, up 44.1 billion won from the end of last year. The central association said results improved as revenue from fund management, including stocks and alternative investments, expanded amid a buoyant stock market in the first half.
By contrast, business conditions for individual cooperatives remain challenging. According to the Ministry of the Interior and Safety, 1,239 Korean Federation of Community Credit Cooperatives (KFCC) nationwide posted a net loss of 676.8 billion won in the first half of this year. The loss narrowed from 1.3287 trillion won a year earlier, but the arrears rate rose 1.26 percentage points to 6.34% at the end of June from the end of last year.
The central association plans to use increased earnings to strengthen its capacity as a support institution rather than increase dividends. In particular, it will focus on smooth restructuring and support for individual cooperatives as the institution overseeing losses and operations that arise during mergers of troubled cooperatives. Through this, it aims to improve the financial structure of all Korean Federation of Community Credit Cooperatives (KFCC) and support a recovery in soundness.
In the second half, it is also expected to accelerate management of the arrears rate by selling nonperforming loans and other measures. Following the merger of 21 cooperatives in the first half of this year, the Ministry of the Interior and Safety (MOIS) plans to merge an additional 30 troubled cooperatives in the second half, pushing for a total of 51 mergers within the year. The Korean Federation of Community Credit Cooperatives (KFCC) aims to return to profit in 2028 by simultaneously resolving nonperforming loans and restructuring.