Outstanding Balance of Technology Finance Loans at 339 Trillion Won by End of May... Hana and IBK Show Strong Performance

[Asia Economy Reporter Song Hwajeong] The outstanding balance of technology finance loans reached 339.3 trillion KRW as of the end of May. Hana Bank and Industrial Bank of Korea were found to have excellent performance in technology finance.

On the 30th, the Financial Services Commission announced that the outstanding balance of technology finance loans stood at 339.3 trillion KRW as of the end of May. The outstanding balance of technology finance loans has been steadily increasing from 205.5 trillion KRW at the end of 2019 to 266.9 trillion KRW at the end of 2020, and 316.4 trillion KRW at the end of last year.

Technology finance supports small and medium-sized enterprises (SMEs) that lack real estate collateral or creditworthiness to smoothly raise funds as long as they have technological capabilities. It provides SMEs with insufficient capital with loans at lower interest rates and higher limits. The average interest rate for technology finance companies is 3.26%, which is 13 basis points (1bp = 0.01 percentage points) lower than the 3.39% for general SMEs. The average loan limit for technology finance companies is 3.39 trillion KRW, higher than the 1.33 trillion KRW for general SMEs.

The financial authorities evaluate the performance of banks in technology finance semiannually to continuously expand funding focused on technology and innovation. According to the second half of 2021 bank technology finance performance evaluation (TECH evaluation), among large banks, Hana Bank and Industrial Bank of Korea were rated excellent, while among small banks, Gwangju Bank and Busan Bank received high marks.

Hana Bank ranked first in two years by expanding pure credit loans rather than guarantees or collateral when supplying technology finance and strengthening support for startup companies. Hana Bank's proportion of pure credit loan balances was 34.3%, exceeding the large bank average of 29.7%. The proportion of startup company balances at Hana Bank was also higher at 55.3%, compared to the large bank average of 46.1%.

Gwangju Bank strengthened support for startups with high technological capabilities and focused on expanding technology-based investments, resulting in its first-place ranking since the TECH evaluation began.

Banks are also conducting their own technology evaluations to internalize technology finance into their internal credit systems and strengthen their capabilities. In particular, banks are enhancing their evaluation infrastructure to actively expand technology evaluations not only for credit but also for investment purposes. They are also increasing recruitment of intellectual property (IP) evaluation experts such as patent attorneys to directly conduct IP value assessments, thereby strengthening their own IP evaluation capabilities.

A Financial Services Commission official said, "The revised TECH evaluation indicators will be applied starting from the evaluation of the first half of this year’s performance to ensure a fair competitive environment among banks and expand funding in innovative fields." He added, "In addition to the cumulative scale of technology credit loans, we plan to expand growth rate indicators emphasizing each bank’s efforts to continuously encourage latecomer banks to expand technology finance."

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