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4 clusters · 7 sources · 43 days · First seen · Last updated

South Korean financial sector loan delinquency rise

Overview

South Korean financial institutions have reported rising delinquency rates across various sectors. In the second quarter of 2024, banks experienced decade-high delinquency rates on real estate and leasing loans, with IBK Industrial Bank of Korea reaching a 14-year peak of 1.54%. This trend was attributed to high interest rates and a slowdown in the commercial property market. By the first half of the year, while insurance companies saw a 13% increase in net profit due to investment income, they also faced growing concerns regarding asset quality. The delinquency rate for insurance company loans rose to 1.08%, driven largely by a spike in corporate loan delinquencies, particularly among small and medium-sized enterprises. Recent data for the first half of the year shows a divergence between profitability and asset quality in the savings bank and mutual finance sectors. Savings banks recorded a four-year high in net profit at 765.8 billion won, aided by securities profits and reduced credit costs. Similarly, mutual finance unions—including credit unions, Nonghyup, Suhyup, and Forest cooperatives—saw net profits rise 71% year-on-year to 714.1 billion won, primarily due to expanded interest income. However, delinquency rates have climbed significantly in these sectors, driven by corporate loans. The savings bank delinquency rate rose to 6.26%, while the mutual finance delinquency rate reached 5.39%. In a more specific breakdown of the top 20 savings banks, net profit surged more than threefold to 574.6 billion won, a 218% increase driven largely by OK Savings Bank and Korea Investment Savings Bank. Despite this, core lending remained stagnant with loan balances growing only 0.3%, as banks remain cautious regarding asset quality. The average liquidity ratio for these top 20 banks fell to 129.18% from 165.48% the previous year, which experts describe as a normalization process.

Entities

Hana Bank · Financial Supervisory Service · Shinhan Bank · Woori Bank · OK Savings Bank

Timeline

  1. 3 days ago

    [BUSINESS] 3 sources
    South Korean major banks maintain robust asset quality despite capital pressures

    South Korea’s four major banks maintain robust asset quality and profitability, but face rising capital management pressures due to increasing risk-weighted assets from corporate lending and shareholder return'

  2. 5 days ago

    [BUSINESS] 3 sources
    South Korean savings banks see net profit triple in H1

    Net profits for South Korea’s top 20 savings banks rose 218% in the first half of the year, driven by large firms, despite stagnant core lending growth and cautious management of delinquency rates.

  3. 15 days ago

    [BUSINESS] 4 sources
    South Korean savings banks and mutual finance unions report rising profits

    South Korean savings banks and mutual finance unions saw record or significant profit growth in H1, though delinquency rates rose due to increasing corporate loan defaults.

  4. about 1 month ago

    [BUSINESS] 2 sources
    South Korean banks see real estate loan delinquency rates hit 10‑year highs

    Korean banks' real‑estate loan delinquency rates rose to decade‑highs in Q2 2024, with IBK hitting 1.54 % and other major banks also seeing sharp increases amid high rates and a sluggish property market.

Sources

biz.heraldcorp.com · newstomato.com · sateconomy.co.kr · seoul.co.kr · sisajournal.com · tfmedia.co.kr · tokenpost.kr

This summary has been updated 3 times: see revision history