Cancellation of Overseas Travel and Business Trips Due to 'COVID-19'... Bank Sector Also Sees Decline in Currency Exchange Amounts

Major Banks See Average 7% Drop in Currency Exchange Amounts This Year... Some Banks Shrink by 17%

[Asia Economy Reporter Kwon Haeyoung] Due to the rapid spread of the novel coronavirus infection (COVID-19), overseas travel and business trips have decreased, leading to a decline in foreign exchange transactions in the banking sector. In particular, airport exchange booths have seen transaction volumes drop to less than half of the usual levels. As the spread of COVID-19 continues, the trend of decreasing foreign exchange transactions is expected to persist for the time being.

According to the financial sector on the 26th, the total foreign exchange amount at four banks?Shinhan, Hana, Woori, and NH Nonghyup Bank?recorded $1.751 billion as of the 21st of this year. This represents a 6.6% decrease compared to the same period last year ($1.875 billion).

All four banks experienced a decline in foreign exchange amounts compared to the previous year. While some banks saw only about a 2% decrease, most banks experienced a drop close to 10%. During the same period, Bank A shrank by 17%, and Bank B by 11%. Airport exchange booths, which serve many domestic and international travelers, reportedly saw a significant reduction in foreign exchange transactions.

An official from a commercial bank explained, "Import-export companies usually handle payment remittances via wire transfer, so most foreign exchange transactions are used for supporting overseas travel or corporate business trip expenses." They added, "With the sharp decline in overseas travel due to COVID-19, it appears that foreign exchange transactions by both individuals and corporations have decreased."

As COVID-19 rapidly spread domestically last week, more countries have started to block entry from Koreans. As of the 24th, six countries?I srael, Bahrain, Jordan, Kiribati, Samoa, and American Samoa?have banned entry from Korea. In Israel’s case, after quarantining Korean tourists, two charter flights were arranged to send them back, and there is a plan to repatriate all 1,300 additional tourists. On the 25th, Hong Kong also banned visits from Korea. Vietnam, one of the most popular destinations for Korean travelers, decided to quarantine arrivals from Daegu and Gyeongbuk for two weeks. If the spread of COVID-19 does not subside, entry restrictions by various countries are expected to become even stricter.

Hana Tour, Korea’s leading travel agency, reported that new bookings in January decreased by 50% compared to the previous year, and it is expected that bookings in February will plummet by 80%.

Companies have effectively issued bans on overseas business trips. Samsung Electronics and LG Electronics have recommended refraining from inter-office and overseas business trips. The three major telecom companies?SK Telecom, KT, and LG Uplus?have already instructed employees via internal memos to avoid overseas business trips and to obtain prior approval by region if travel is necessary.

With the spread of COVID-19 causing factory shutdowns in major manufacturing companies and rapidly cooling the grassroots economy including self-employed businesses, the impact on the banking sector is expected to grow. Not only is foreign exchange volume decreasing, but delinquency rates on loans to self-employed individuals and companies are also expected to rise. As confirmed COVID-19 cases surge mainly in the Daegu region, banks based there, such as Daegu Bank and Kyongnam Bank, are expected to face greater challenges. Banks plan to expand new funding for small business owners and SMEs and strengthen support measures such as maturity extensions, interest reductions, and repayment deferrals.

This content was produced with the assistance of AI translation services.