"Overseas Travel and Business Trips Plummet"…Bank Foreign Exchange Amount Decreases Due to COVID-19 Shock (Comprehensive)

Major Banks' Currency Exchange Amounts Down 6.6% Year-on-Year This Year... Some Banks See 17% Sharp Decline in Exchange Amounts

[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 at banks. In particular, airport exchange counters have seen their 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?recorded $1.751 billion from the beginning of this year until the 21st. 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%. It is reported that airport exchange counters, which serve many domestic and international travelers, saw a significant reduction in foreign exchange transactions.

A representative from a commercial bank explained, "Import-export companies usually handle payment remittances via wire transfer, so foreign exchange transactions are mostly used for 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 Korea. As of the 24th, six countries?I srael, Bahrain, Jordan, Kiribati, Samoa, and American Samoa?have banned entry from Korea. Israel, after quarantining Korean tourists, sent them back on two charter flights and plans to return all 1,300 tourists. On the 25th, Hong Kong also banned visits from Korea. Vietnam, one of the most popular destinations for Korean travelers, decided to quarantine entrants from Daegu and Gyeongbuk for two weeks. If the spread of COVID-19 does not subside, entry restrictions by various countries are expected to tighten further.

Hana Tour, Korea's leading travel agency, reported that new bookings in January decreased by 50% compared to the previous year, and February bookings are expected to plunge by 80%.

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

As the spread of COVID-19 leads to factory shutdowns at major manufacturing companies and rapidly cools the bottom-tier 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 anticipated to rise. With a surge in confirmed COVID-19 cases centered 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 supply to small business owners and SMEs and strengthen support measures such as maturity extensions, interest reductions, and repayment deferrals. They are also providing rent support for small business owners and SMEs. IBK Industrial Bank will reduce rent by 30% (up to 1 million KRW per month) for buildings owned by the bank for three months starting in March. This rent reduction will benefit 55 small business owners and SMEs, easing their rent burden by approximately 50 million KRW over three months. Shinhan Bank will also reduce monthly rent by 30%, up to 1 million KRW per month for three months, for small business owners and SMEs located in bank-owned buildings.

KB Kookmin Bank has temporarily waived fees for internet banking, Star Banking, and automated teller machine usage for customers in the Daegu and Gyeongbuk regions starting from the previous day.

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