Financial Supervisory Service Orders KB Savings Bank to Manage Household Credit Loan Soundness... Management Caution Measures

On the 31st of last month, 4 management advisories and 1 improvement notice were communicated

[Asia Economy Reporter Song Seung-seop] It has been confirmed that KB Savings Bank recently received a 'management caution' measure to manage the soundness of household credit loans.

According to financial authorities on the 7th, KB Savings Bank was notified by the Financial Supervisory Service on the 31st of last month of four management caution items and one improvement item.

KB Savings Bank increased the loan scale by raising the limit or lowering the interest rate of household credit loan products launched in July 2020. In this process, the loan limit and interest rate were changed by the approval of the head of the relevant division without review by the product committee.

The Financial Supervisory Service warned, "If excessively aggressive limit increases and interest rate discount policies continue without sufficient review, it may lead to deterioration in the soundness and profitability of household credit loans," and added, "The application and changes of limits or interest rate policies for household credit loan products should be submitted to the product committee."

The Financial Supervisory Service also pointed out that despite the rapid increase in risk-weighted assets such as standard loans of KB Savings Bank last December and the continuous decline in the capital adequacy ratio (BIS), no specific management measures or capital expansion plans were prepared.

The Financial Supervisory Service explained, "It is necessary to establish mid- to long-term risk management measures corresponding to the rapid increase in risk-weighted assets and prepare and implement specific plans to respond to economic fluctuations or other deteriorations in business conditions."

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