Hyundai Commercial Delinquency Rate at 0.65%... "Proactive Risk Management"

Due to prolonged high interest rates and the deterioration of real estate project financing (PF), delinquency rates among installment finance and leasing companies, including capital firms, have soared. Amid growing concerns over soundness, attention is focused on Hyundai Commercial's risk management system, which maintains a delinquency rate in the 0% range.

According to Hyundai Commercial on the 4th, as of the end of the first quarter this year, the delinquency rate (over 1 month) stood at 0.65%, the lowest level in the industry. The average delinquency rate among six capital firms with total assets exceeding 10 trillion won (Hyundai, Hana, KB, Shinhan, Woori Financial Capital, and Hyundai Commercial) was 1.56%, more than twice that of Hyundai Commercial. Regarding the ratio of non-performing loans, the industry average was in the 2% range, but Hyundai Commercial recorded 1.48%.

Hyundai Commercial explained that it proactively established a risk management system. The Risk Management and Operations Committee monitors soundness indicators and takes swift action using the 'Sync Frame' in case of a crisis. The Sync Frame is a structure for rapid decision-making, where the sales, risk, and finance departments jointly revise screening and sales strategies. Additionally, when abnormal signs are detected in macro indicators, a 'Contingency Plan' is operated to assess liquidity crisis risks and respond immediately.

They also developed their own credit evaluation models. Since Hyundai Commercial's main customers are individual business owners and small and medium-sized enterprises engaged in construction, freight, and transportation industries, it was difficult to use existing personal credit evaluation models. Therefore, they created 12 proprietary models applying not only the borrower's loan repayment ability but also product-specific characteristics. Furthermore, they developed non-performing loan evaluation and debt recovery models using machine learning techniques. These models are designed for rapid crisis response by allocating debts based on delinquency rate predictions.

A Hyundai Commercial official stated, "We overcame crises such as the downturn in the construction market and the COVID-19 pandemic through a systematic risk management system," adding, "Since the end of 2022, we have strengthened our risk and debt organizations, continuing stable external growth and industry-leading soundness management simultaneously."

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