Savings Banks Q1 Net Profit Up 19%... Delinquency Rate Also Rises

[Asia Economy Reporter Kim Hyo-jin] The net profit of savings banks in the first quarter of this year increased by 19.4% compared to the same period last year. The loan delinquency rate rose by 0.3 percentage points.

On the 25th, the Financial Supervisory Service (FSS) announced the "2020 First Quarter Savings Bank Business Performance (Provisional)" report containing these details. The data reflects the business performance of 79 savings banks operating as of the end of March.

According to the FSS, the net profit of savings banks in the first quarter was 246.3 billion KRW, an increase of 19.4% (40 billion KRW) compared to the first quarter of last year.

Although non-interest losses and provisions for loan losses increased, interest income and expenses rose significantly due to loan expansion.

As of the end of March, the total loan delinquency rate was 4.0%, up 0.3 percentage points from the end of last year.

The corporate loan delinquency rate was 4.3%, up 0.4 percentage points from the end of last year, and the household loan delinquency rate was 3.8%, up 0.2 percentage points from the end of last year.

The ratio of non-performing loans classified as fixed or below was 4.7%, similar to 4.7% at the end of last year.

The loan loss provision coverage ratio against required reserves was 107.9%, down 5.1 percentage points from 113.0% at the end of last year, but all savings banks met the requirement of over 100% of required reserves.

The BIS-based capital adequacy ratio was 14.83%, the same as at the end of last year. Although risk-weighted assets increased, capital increased to a similar level due to the rise in net profit.

Total assets of savings banks reached 78.1 trillion KRW, an increase of 1.3% (1 trillion KRW) compared to the end of last year.

Total loans amounted to 67 trillion KRW, up 3.1% (2 trillion KRW) from the end of last year. Household loans were 26.9 trillion KRW, up 2.9% (800 billion KRW), and corporate loans were 38.3 trillion KRW, increasing 3.1% (1.1 trillion KRW), mainly in corporate loans.

The FSS evaluated that "the growth trend of total assets and total loans in the savings bank sector continues, and net profit also shows favorable performance."

However, the FSS stated, "Due to the sector's characteristic of having a high proportion of low-credit borrowers, the recent COVID-19 situation raises the possibility of latent risks materializing," and added, "We plan to closely monitor the business and soundness status of savings banks and induce proactive capital expansion such as increasing internal reserves."

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