"Over 3 Trillion Won Paid on Behalf of SMEs"—Subrogation Payments Exceed Pre-COVID-19 Levels

[Financial News] This year, the Korea Technology Finance Corporation (KOTEC) and the Korea Credit Guarantee Fund (KODIT) have paid a total of 3.6517 trillion won in subrogation payments on behalf of small and medium-sized enterprises (SMEs). This figure surpasses the 2.1848 trillion won recorded at the peak of the COVID-19 pandemic in 2020.
According to data submitted by KOTEC and KODIT to the office of Democratic Party of Korea (DPK) lawmaker Kim Won-i on the 10th, subrogation payments from January to November this year amounted to 1.4275 trillion won for KOTEC (direct guarantees) and 2.2242 trillion won for KODIT (general guarantees).
Subrogation payments refer to the funds paid by KOTEC and KODIT when SMEs that received guarantees default on their bank loans due to bankruptcy, closure, or restructuring.
KOTEC’s subrogation payments increased by 15.74% (194.2 billion won) compared to the same period last year, with payments from January to November this year already exceeding the total for 2024 (1.3248 trillion won). KODIT’s subrogation payments are also on track to surpass last year’s record high of 2.2283 trillion won over the past five years.
For KOTEC, subrogation payments have been steadily rising since 2021 (670.2 billion won).

As of last month, KOTEC’s annualized subrogation payment rate stood at 4.77%, remaining above 4% since March last year (4.06%). The annualized guarantee accident rate also stayed high at 5.19%.

As of November, KODIT’s delinquency rate (annualized balance) was 3.69%, higher than the 3.64% recorded in 2024.
Debt recovery remains sluggish. As of last month, KOTEC’s annualized recovery rate for Indemnity Receivables was 3.71%, while the rate for special bonds was only 0.45%. KODIT’s debt recovery rate last month was just 0.3%.

bng@fnnews.com Kim Hee-sun Reporter