PF Guarantee Balance Falls, but Risks Persist... Expected Loss Rate Rises Nearly 13-Fold in Three Years

[Financial News] The expected loss rate on project financing (PF) guarantees issued by Korea Housing Finance Corporation (HF) has risen nearly 13-fold in three years. Provision liabilities set aside against potential losses also increased more than 15-fold during the same period.
According to data submitted by HF to Park Sung-hoon, a People Power Party lawmaker on the National Policy Committee, the corporation's expected loss rate on PF guarantees stood at 1.15% at the end of last year.
The rate rose steadily from 0.09% at the end of 2022 to 0.26% in 2023 and 0.82% in 2024, before moving into the 1% range last year. The expected loss rate stood at 0.62% at the end of the first half of this year.
Provision liabilities set aside against potential losses also increased sharply. They rose from KRW 3.549 billion at the end of 2022 to KRW 15.117 billion at the end of 2023, KRW 47.069 billion at the end of 2024, and KRW 54.29 billion at the end of last year. That amounted to a 15.3-fold increase in three years. The figure stood at KRW 21.745 billion at the end of the first half of this year.
Although the outstanding PF guarantee balance declined, it remained in the KRW 4 trillion range. It rose from KRW 3.9322 trillion at the end of 2022 to KRW 5.9205 trillion at the end of 2023, then fell to KRW 5.7234 trillion at the end of 2024 and KRW 4.7380 trillion at the end of last year. At the end of the first half of this year, it stood at KRW 3.5349 trillion.
A total of 45 project sites showed signs of insolvency or risk from 2020 through the second quarter of this year.
The reasons for the incidents included loss of the benefit of time (12 sites), registration of credit caution information (5), provisional seizure (4), interest payment delinquency (4), corporate reorganization, composition, or bankruptcy (4), principal repayment delinquency (3), incidents caused by problems at related companies (2), expiration of the guarantee term (2), credit management information (1), and other reasons (8).
[email protected] Kim Tae-il Reporter