Savings Banks' Cumulative Q3 Net Profit Reaches 1.02 Trillion KRW, Up 84.6 Billion KRW YoY

Slight Increase in Delinquency Rate but Overall Soundness Maintained
FSS "Continues to Encourage Enhanced Loss Absorption Capacity"

[Asia Economy Reporter Kim Hyo-jin] The net income of 79 domestic savings banks from January to September this year amounted to 1.0203 trillion KRW, an increase of 84.6 billion KRW (9.0%) compared to 935.7 billion KRW during the same period last year, the Financial Supervisory Service (FSS) announced on the 19th.

Although the provision for loan losses increased by 225.7 billion KRW due to the upward adjustment of the reserve ratio, net income expanded as interest income increased more significantly (393.4 billion KRW).

As of the end of September, the total loan delinquency rate of savings banks was 3.8%, up 0.1 percentage points from 3.7% at the end of last year. Compared to the end of the same month last year (4.2%), it decreased by 0.4 percentage points.

The corporate loan delinquency rate was 4.1%, up 0.2 percentage points from 3.9% at the end of last year. Both corporate loans and individual business loans increased by 0.2 percentage points.

The household loan delinquency rate was 3.5%, down 0.1 percentage points from 3.6% at the end of last year. The mortgage loan delinquency rate decreased by 0.4 percentage points, and the household credit loan delinquency rate fell by 0.2 percentage points.

The ratio of non-performing loans classified as substandard or below was 4.6% at the end of September, down 0.1 percentage points from 4.7% at the end of last year.

The loan loss provision coverage ratio against required reserves (110.4%) decreased by 2.6 percentage points from 113.0% at the end of last year, but all savings banks maintained provisions exceeding 100% of the required reserves.

The Basel III (BIS) capital adequacy ratio was 14.61%, down 0.22 percentage points from 14.83% at the end of last year, but remained at a level higher than the regulatory minimum.

The growth rate of risk-weighted assets due to loan increases (8.6 trillion KRW, 13.3%) slightly exceeded the growth rate of capital due to net income increase (1.1 trillion KRW, 11.6%).

Total assets of savings banks reached 85.3 trillion KRW, an increase of 8.1 trillion KRW (10.6%) compared to 77.2 trillion KRW at the end of last year. Total loans rose by 8.2 trillion KRW (12.6%) to 73.2 trillion KRW.

Capital increased by 920 billion KRW (10.2%) to 10 trillion KRW from 9 trillion KRW at the end of last year. This was due to an increase in retained earnings (853 billion KRW) from realized net income.

The FSS evaluated that the savings bank sector showed favorable business performance as loan growth continued, expanding interest income.

Although delinquency rates rose slightly, the FSS viewed the current soundness indicators as generally favorable.

However, the FSS plans to continue proactively enhancing loss absorption capacity by establishing additional provision standards in preparation for prolonged economic downturns and will closely monitor soundness trends.

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