Non-Card Credit Companies See Sharp Profit Increase Last Year Due to Loan Expansion

[Asia Economy Reporter Song Hwajeong] Last year, net profits of specialized credit finance companies excluding credit card companies surged by more than 70% due to increased interest income from expanded loans and gains from securities.

According to the Financial Supervisory Service on the 7th, the combined net profit of 123 specialized credit finance companies excluding card companies?including 23 installment finance companies, 26 leasing companies, and 74 new technology finance companies?was approximately KRW 4.4562 trillion last year, marking a 73.8% increase compared to the previous year. Interest income rose by 12.3% due to loan expansion, and securities income increased by 69.6%. Expenses increased by 11.2% due to higher corporate taxes and selling and administrative expenses following improved performance.

As of the end of last year, the total assets of specialized credit finance companies reached KRW 207.4 trillion, up 14.5% from the end of the previous year. Proprietary business assets increased by KRW 6.1 trillion. Leasing assets related to automobiles rose by KRW 4.2 trillion, and new technology business finance assets increased by KRW 2.3 trillion. Loan receivables increased by KRW 17.6 trillion. Corporate loans grew by KRW 14.9 trillion due to increased loans related to real estate and construction industries.

Asset soundness and capital adequacy remained at favorable levels. As of the end of last year, the delinquency rate was 0.86%, and the ratio of non-performing loans (NPLs) was 1.33%, both down by 0.4 percentage points compared to the end of the previous year. Last year, an additional KRW 44.5 billion was set aside for loan loss provisions, bringing the year-end total to KRW 3.5372 trillion. The coverage ratio, which is the ratio of loan loss provisions to NPLs, improved by 21 percentage points from the previous year to 151%. The adjusted capital adequacy ratio rose by 0.8 percentage points from the end of the previous year to 17.2%, exceeding the regulatory ratio of 7%. The leverage ratio, which is the ratio of total assets to equity capital, decreased to 6.3 times from 6.7 times at the end of the previous year. The leverage ratio limit for specialized credit finance companies was 10 times until the end of last year but must be adjusted to within 9 times from this year through 2024. From 2025 onwards, it must be maintained at 8 times or less.

The Financial Supervisory Service stated, "We will continue to implement liquidity management measures and strengthen monitoring of major specialized credit finance companies' responses to the tightened leverage ratio regulations."

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