Securities Firms' Real Estate PF Delinquency Rate Exceeds 10%

Financial Sector PF Loans Increase by 1.8 Trillion Won in 3 Months

[Image source=Yonhap News]

The delinquency rate of real estate project financing (PF) by securities companies reached 10.38% as of the fourth quarter of last year. According to data submitted by the Financial Supervisory Service to the office of Yoon Chang-hyun, a member of the People Power Party, the delinquency rate in the financial sector's real estate loans increased as of the end of last year.

Compared to the third quarter of last year, the delinquency rate for securities companies rose by 2.22 percentage points in the fourth quarter, while specialized credit finance companies also increased from 1.13% to 2.20% during the same period.

Rep. Yoon stated, "Excluding the status of large securities companies confirmed to have no issues with real estate PF, it appears that some small and medium-sized securities companies' delinquency rates could approach 20%," adding, "It is crucial for authorities to manage this carefully to prevent problems in some securities companies from spreading to financial instability."

PF loans in the financial sector also increased by 1.8 trillion KRW in just three months. As of the end of last year, the outstanding balance of real estate PF loans in the financial sector was recorded at 129.9 trillion KRW, up 1.8 trillion KRW from 128.1 trillion KRW at the end of September last year.

A financial regulatory official said, "The scale of delinquencies in securities companies and specialized credit finance companies is low compared to their own capital."

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