Savings Banks Surpass Total Loans of 100 Trillion Won, Net Profit Nears 2 Trillion Won with 40% Increase

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The net income of the savings bank industry increased by 40% last year, approaching 2 trillion won. Total loans surpassed 100 trillion won. Financial authorities plan to strengthen loss absorption capacity in preparation for the potential realization of latent non-performing loans.

According to the '2021 Mutual Savings Banks Business Performance (Provisional)' data released by the Financial Supervisory Service on the 30th, the savings bank sector recorded a net income of 1.9654 trillion won last year. This is an increase of 565.7 billion won (40.4%) from 1.4 trillion won the previous year.

Although expenses increased, including an increase of 171.6 billion won in provisions for loan losses set aside to prepare for defaults, net interest income increased by 920.5 billion won, which expanded net income.

With the realization of net income, retained earnings increased by 1.8 trillion won, boosting equity capital. Equity capital grew by 2.2 trillion won (21.1%) from 10.4 trillion won to approximately 12.6 trillion won. Total assets increased by 26.2 trillion won (28.5%) to 118.2 trillion won. Total loans rose by 22.9 trillion won (29.5%) to 100.5 trillion won, with corporate loans increasing at a faster rate (36.3%) than household loans (19.8%).

Asset soundness was generally favorable, with the total credit delinquency rate declining. At the end of 2021, the total credit delinquency rate was 2.5%, down 0.8 percentage points from a year earlier. However, the corporate loan delinquency rate fell by 1.6 percentage points to 1.8%, while the household loan delinquency rate rose by 0.4 percentage points to 3.7%. The ratio of non-performing loans classified as substandard or below also decreased by 0.8 percentage points to 3.4%.

The BIS ratio, a capital adequacy indicator, was 13.40%, down 0.83 percentage points from 14.23% in 2020. A higher BIS ratio indicates better capital adequacy. However, considering the regulatory ratio (8% for assets over 1 trillion won, 7% for assets under 1 trillion won), it remains at a high level. The growth rate of risk-weighted assets due to loan increases (30.7%) exceeded the growth rate of BIS-based equity capital from net income increases (23.0%).

The Financial Supervisory Service holds the view that soundness indicators are generally favorable at present but plans to strengthen loss absorption capacity. This is because latent non-performing loans may emerge, especially among multiple debtors, due to the resurgence of COVID-19 and domestic and international economic uncertainties.

Additionally, with the expansion of savings banks' scale, the agency plans to continuously promote advanced risk management and enhancement of capital adequacy.

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