Lee Bok-hyun, Financial Supervisory Service Chief: "Rising Delinquency Rates in Secondary Financial Sector... Ensuring Thorough Risk Management"

Lee Bok-hyun, Governor of the Financial Supervisory Service [Photo by Yonhap News]

Lee Bok-hyun, Governor of the Financial Supervisory Service, urged risk management regarding the rising delinquency rates in the secondary financial sector. ▶Related article Our paper dated the 19th [Crisis in the Secondary Financial Sector]① Mutual Finance and Savings Banks Show Delinquency Rate 'Warning Signs'

At an executive meeting on the 20th, Governor Lee requested, "Please ensure thorough management, including setting sufficient provisions, in relation to the rising delinquency rates of savings banks, mutual finance, and card companies in the secondary financial sector."

He added, "Financial companies such as banks should also make joint efforts for win-win finance by promptly implementing prepared financial supply plans to prevent the contraction of financial services for low-credit borrowers during economic downturns."

Governor Lee's remarks are closely related to the recent warning signs in delinquency rates within the secondary financial sector. The overall delinquency rates of savings banks and mutual finance sectors (including credit unions, Nonghyup, Suhyup, and the Forestry Cooperative) are on an upward trend. According to the Financial Supervisory Service, the delinquency rate of savings banks at the end of the first quarter rose by 1.66 percentage points in just three months (one quarter) to 5.07%. The delinquency rate in the mutual finance sector increased from about 1.17% at the end of 2021 to 1.52% at the end of last year, and further rose to 2.42% in the first quarter of this year, surpassing 2%. The situation in the credit finance sector is also unfavorable. Capital companies saw an increase of 0.54 percentage points to 1.79%, and card companies rose by 0.33 percentage points to 1.53%.

Meanwhile, Governor Lee also emphasized swift and thorough responses regarding the unsound business practices of financial investment companies on the same day.

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