Financial Companies' Local Reinvestment Evaluation... NongHyup, Busan, and SBI Savings Bank 'Top Excellence'

Financial Services Commission Announces 2021 Regional Reinvestment Evaluation Results of Financial Companies

[Asia Economy Reporter Kwangho Lee] According to the results of the 'Community Reinvestment Act' evaluating financial companies' loans within local areas, NongHyup Bank and Industrial Bank of Korea received the 'Best' rating among commercial banks, while Busan, Gwangju, Jeonbuk, and Gyeongnam Banks were rated 'Best' among regional banks, and SBI Savings Bank and OK Savings Bank received the 'Best' rating among savings banks.

According to the '2021 Community Reinvestment Evaluation Results' announced by the Financial Services Commission on the 19th, NongHyup Bank and Industrial Bank of Korea received the highest rating in 7 and 5 regions respectively among commercial banks, achieving an overall 'Best' grade.

The Community Reinvestment Act was introduced for the first time in 2020 to encourage financial companies that collect deposits in local areas to support the growth of the local economy.

The evaluation targets banks and large savings banks. Banks exclude branches of the Korea Development Bank, Export-Import Bank, and internet-only banks, while savings banks are limited to those with multiple business areas and assets exceeding 1 trillion KRW.

The evaluation consists of quantitative indicators such as local fund supply, support for small and medium enterprises, support for loans to low-income households, infrastructure investment performance, and qualitative indicators evaluating local financial support strategies including COVID-19 related financial support in 13 metropolitan local governments excluding the Seoul Capital Area (Seoul, Gyeonggi, Incheon).

The ratings are classified from Best, Excellent, Good, Slightly Insufficient, to Insufficient.

Among commercial banks, NongHyup Bank received the Best rating in Busan, Daegu, Daejeon, Chungnam-Sejong, Gyeongbuk, Gyeongnam, and Jeju, while Industrial Bank of Korea received the Best rating in Busan, Daegu, Gwangju, Gyeongnam, and Jeju.

Kookmin Bank received the Best rating in Busan, Daegu, and Daejeon, and Shinhan Bank received the Best rating in Gwangju, Gangwon, and Chungbuk, resulting in an overall 'Excellent' rating.

Hana Bank was rated 'Good', Woori Bank, Citibank, and Suhyup Bank were rated 'Slightly Insufficient', and SC First Bank was rated 'Insufficient'.

Among regional banks, Busan, Gwangju, Jeonbuk, and Gyeongnam Banks received the Best rating. Meanwhile, Daegu, Gwangju, and Gyeongbuk Banks received the Best rating and achieved an Excellent grade.

For savings banks, SBI Savings Bank and OK Savings Bank received the Best rating, while Pepper, Korea Investment, and BNK Savings Banks received the Excellent rating.

As of the end of last year, the proportion of loans to small and medium enterprises among corporate loans in the evaluation regions was about 95.9%, up 0.5 percentage points from the previous year. During the same period, the proportion of loans to low-income households was 0.60%, down 0.05 percentage points from the previous year.

The number of branches per 10,000 people in the evaluation regions at the end of last year was 1.12, which was lower than the Seoul Capital Area (1.33).

A Financial Services Commission official stated, "The community reinvestment evaluation results will be used for management performance evaluations and criteria for selecting local government and local education office depositories. We plan to discuss expanding incentives with related organizations to increase the utilization of the community reinvestment evaluation. We will also continuously revise and supplement the evaluation indicators considering the local economic situation and to enhance the validity of the evaluation."

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