Reasons Why Sae Himang Holssi Loans Fell Short of Supply Targets Last Year

[Asia Economy Reporter Song Hwajeong] The Saehee Hope Loan, which provides funds at low interest rates to low-income households, supplied 3.2 trillion won last year, falling short of the initial supply target. This was due to the worsening supply environment caused by the prolonged COVID-19 pandemic and the reduction of branch offices.

According to the Financial Supervisory Service on the 30th, the supply performance of Saehee Hope Loans by domestic banks last year was 3.1734 trillion won, achieving 90.8% of the supply target (3.5 trillion won). The decrease in branch visitors due to COVID-19 and the overall reduction of bank branches led to weakened customer contact points and sales capabilities, resulting in falling short of the target. The number of Saehee Hope Loan handling bank branches decreased by about 300, from 6,326 at the end of 2020 to 6,023 at the end of last year. The demand for funds also somewhat decreased due to extensions and repayment deferrals that have continued since April 2020 to overcome COVID-19.

However, the proportion of non-face-to-face loans increased. It expanded from 35.3% in the first half of last year to 40.8% in the second half. Among the five major banks, Kookmin Bank started non-face-to-face loans from August, following Shinhan, Woori, and Hana Banks.

The average interest rate of Saehee Hope Loans (newly handled) last year was 5.94%, down 0.09 percentage points from 6.03% the previous year. The Financial Supervisory Service explained, "Although the average interest rate of household credit loans in the banking sector turned upward last year, relatively low-interest funds were supplied to borrowers with low income and credit scores who are disadvantaged in terms of limits and interest rates."

As of the end of last year, the delinquency rate was 1.43%, showing an improving trend by falling 0.28 percentage points compared to the previous year. The delinquency rate decreased from 2.33% in 2017 to 2.23% in 2019 and 1.71% in 2020.

By bank, Kookmin Bank recorded 549 billion won, Hana Bank 529.7 billion won, Shinhan Bank 510.8 billion won, Nonghyup Bank 506.3 billion won, Woori Bank 460.8 billion won, and Industrial Bank of Korea 244.4 billion won. The top six banks’ performance totaled 2.8 trillion won, accounting for 88.3% of domestic banks’ performance. Daegu Bank, Gwangju Bank, and Hana Bank showed an increase compared to the previous year. Daegu Bank increased by 126.9% to 87.4 billion won, Gwangju Bank by 63.0%, and Hana Bank by 0.7%, respectively.

The Saehee Hope Loan is an unsecured credit loan handled with banks’ own funds to expand fund supply and alleviate financial burdens for low-income households. Since its launch in November 2010, it has supported a total of 2.23 million low-income households with 29 trillion won as of the end of last year.

To provide stable funds to low-income households, the banking sector plans to supply 3.5 trillion won of Saehee Hope Loans this year.

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