Yeojeonsa Last Year Net Profit 2.0557 Trillion Won... 5.7% Increase YoY

Increase in Net Profit from Core Businesses such as Lease and Installments, Along with Growth in Interest Income

[Asia Economy Reporter Kim Hyo-jin] The Financial Supervisory Service (FSS) announced on the 29th that the net profit of specialized credit finance companies (hereinafter referred to as credit finance companies), excluding credit card companies, was tentatively estimated at 2.0557 trillion KRW last year. This represents a 5.7% (111.2 billion KRW) increase compared to 2018 (1.9445 trillion KRW).

The net profit from core businesses such as leasing, installment financing, and new technology finance increased by 5.7% (154.7 billion KRW) compared to the previous year, and interest income rose by 6.7% (355.7 billion KRW).

Funding costs increased by 9.6% (266.9 billion KRW), and bad debt expenses rose by 3.7% (58.2 billion KRW) compared to the previous year. As of the end of last year, the total assets of credit finance companies stood at 161.7 trillion KRW, up 12.7% (18.2 trillion KRW) from 143.5 trillion KRW at the end of the previous year.

Core business assets amounted to 62.2 trillion KRW, an 11.1% (6.2 trillion KRW) increase from 56 trillion KRW at the end of the previous year, due to growth in leasing and installment assets. Loan assets increased by 11.3% (7.8 trillion KRW) to 76.7 trillion KRW, driven by an increase in corporate loans compared to 68.9 trillion KRW at the end of the previous year.

The delinquency rate of credit finance companies as of the end of last year was 1.68%, down 0.24 percentage points from 1.92% at the end of the previous year. The ratio of non-performing loans classified as substandard or below was 2.12%, up 0.09 percentage points from 2.03% at the end of the previous year.

As of the end of last year, the adjusted capital adequacy ratio (16.1%) and leverage ratio (6.7 times) were not significantly different from those at the end of the previous year (16.3% and 6.6 times, respectively).

The FSS explained that all credit finance companies meet the supervisory standards set by regulations. The supervisory standards require an adjusted capital adequacy ratio of at least 7% and a leverage ratio within 10 times.

As of the end of last year, excluding credit card companies, there were 107 credit finance companies in total: 23 installment finance companies, 26 leasing companies, and 58 new technology finance companies. This is an increase of 10 companies compared to the end of the previous year.

The FSS evaluated that the total assets and net profit of credit finance companies showed a continuous upward trend last year, and indicators such as delinquency rates and adjusted capital adequacy ratios were generally favorable. However, considering the possibility of prolonged impacts from the novel coronavirus disease (COVID-19), the FSS plans to closely monitor the liquidity and soundness of credit finance companies and actively promote financial support measures such as principal and interest repayment deferrals to alleviate the financial burdens of vulnerable borrowers.

Provided by the Financial Supervisory Service

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