Savings Banks, 1st Quarter 44 Billion Surplus... Corporate Loan Delinquency Rate Nears 14%

[Financial News] Savings banks achieved a net profit of over 40 billion won in the first quarter of this year. It is the first first-quarter surplus in three years since 2022. However, despite efforts to reduce non-performing loans, the delinquency rate continued to rise, showing a deterioration in asset soundness. 
According to the Korea Federation of Savings Banks on the 29th, the net profit of 79 savings banks nationwide in the first quarter was 44 billion won. This is a significant recovery compared to the net loss of 154.3 billion won in the first quarter of last year. 
It is analyzed that the performance improved as the provision for bad debts decreased this quarter by preemptively setting aside provisions. The provision for bad debts in the first quarter was 900 billion won, a decrease of 3 trillion won compared to the same period last year (1.2 trillion won). 
While the scale of loans decreased, the increase in delinquent loans led to a deterioration in asset soundness. The delinquency rate in the first quarter was 9.00%, up 0.48%p from the end of last year (8.52%). In particular, the corporate loan delinquency rate increased by 0.84%p from 12.81% to 13.65%. The household loan delinquency rate rose by 0.19%p to 4.72% compared to the end of last year (4.53%). 
A representative of the Korea Federation of Savings Banks explained, "Despite active self-help efforts such as sale and write-off to reduce non-performing loans, the delinquency rate increased compared to the end of last year due to the increase in delinquent loans and the decrease in the scale of loans." 
In fact, the total loan size of the industry decreased by 1.4% to 96.5 trillion won compared to the end of last year. Household loans remained at the same level as the end of last year at 40.4 trillion won, but corporate loans decreased by 2.4% to 49.4 trillion won in just one quarter. The total asset size also shrank by 1.9% to 118.6 trillion won compared to the end of last year. 
Although the delinquency rate increased, management stability showed a good level. The BIS (Bank for International Settlements) capital adequacy ratio, which indicates asset liquidity, rose by 0.26%p to 15.28% compared to the end of last year. It maintains a level twice as high as the legal standard. The provision for bad debts, which is set aside to prepare for losses, was also set at 112.60%, exceeding the legal reserve rate of 100%.
With the delay in real estate market recovery, consumption contraction, and price fluctuations, internal and external uncertainties continue, and a full turnaround is expected to be possible only at the end of this year. The federation plans to establish a non-performing loan (NPL) subsidiary and create a joint fund to speed up the resolution of non-performing project financing (PF). 
A federation representative said, "Due to the continued macroeconomic uncertainty and the unfavorable business environment caused by the slowdown in economic recovery, the improvement of soundness indicators is being delayed," adding, "We are managing through active self-help efforts such as promoting a PF joint fund, sale, and write-off, and it is expected to steadily improve with the economic recovery trend in the future." 

zoom@fnnews.com Lee Jumi Reporter