South Korean agricultural cooperatives face real estate loan risks

South Korean agricultural and fisheries cooperatives are facing significant financial stability risks due to an extreme concentration in real estate mortgage loans. Data submitted to the National Assembly reveals that over 83% of total loans provided by agricultural cooperatives and over 71% by fisheries cooperatives are tied to real estate collateral, deviating from their original purpose of supporting farming and fishing activities.

This concentration has led to rising delinquency rates. In agricultural cooperatives, real estate-related mortgage delinquencies account for approximately 95.7% of all overdue loan balances. Similarly, in fisheries cooperatives, real estate loans make up over 91% of total delinquencies.

Specific concerns have been raised regarding ‘joint loans’—a method where multiple cooperatives share a single borrower to manage large loans. The delinquency rate for these joint loans has reached 17.5%, with unpaid amounts totaling 4.36 trillion won. Much of this instability is driven by real estate development projects and bridge loans, which show delinquency rates of 30.1% and 34.6%, respectively. Lawmakers have called for urgent measures to reorganize loan portfolios and improve asset quality management.