At the End of Last Year, Insurance Companies' Loan Claims Reach 253 Trillion Won... Corporate Loans Significantly Increase
FSS "Plans to Encourage Strengthening Loss Absorption Capacity through Adequate Loan Loss Provisions"
[Asia Economy Reporter Park Sun-mi] The outstanding loan balance of insurance companies reached 253 trillion won last year, with corporate loans increasing significantly more than household loans.
According to the Financial Supervisory Service's 'Status of Insurance Company Loan Claims' on the 2nd, the outstanding loan balance of insurance companies at the end of last year was 253 trillion won, an increase of 7.2 trillion won compared to the end of September last year. While household loans increased by 1.5 trillion won from 120.1 trillion won at the end of September to 123.1 trillion won, corporate loans rose by 5.7 trillion won to 129.7 trillion won during the same period.
Corporate loans by insurance companies were only 65.7% of household loans at the end of 2015 but have rapidly increased, surpassing household loans since the second quarter of last year.
In particular, loans to small and medium-sized enterprises reached 82.4 trillion won at the end of last year, an increase of 3.4 trillion won compared to the end of September.
The increase in corporate loans is interpreted as a result of the insurance industry's steady expansion of investments in real estate project financing (PF), infrastructure construction, and alternative energy to enhance asset management returns in an era of low interest rates and low growth. Real estate PF loans amounted to 36.4 trillion won at the end of last year, up 1.5 trillion won from the end of September.
Meanwhile, the non-performing loan ratio (NPL ratio) of insurance companies at the end of last year remained at 0.15%, the same as at the end of September.
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The NPL ratio for household loans decreased by 0.01 percentage points to 0.17% compared to the end of September, while that for corporate loans increased by 0.01 percentage points to 0.13%. A Financial Supervisory Service official stated, "We will continuously monitor the soundness indicators of insurance company loans, such as delinquency rates, and encourage strengthening loss absorption capacity through sufficient provisioning for loan losses in response to situations like the COVID-19 pandemic."
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