Journalist

Kim Su-ji
  • South Korea’s Top 5 Banks Seen Cutting Household Loans by About 4 Billion Won in February
    South Korea’s Top 5 Banks Seen Cutting Household Loans by About 4 Billion Won in February Household loan balances at South Korea’s major banks are expected to fall for a third straight month, as tough government lending rules and rising interest rates squeeze liquidity. The shift is cooling real estate-related borrowing and reshaping money flows across asset markets. Still, concerns persist that funds blocked from property loans could move into stocks, reviving debt-funded investing. As of Feb. 26, household loan balances at the five largest banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — totaled 765.4257 trillion won, according to the financial sector on Sunday. That was down 387.4 billion won from the end of January (765.8131 trillion won). With one business day left and month-end swings typically large, the February decline is expected to be about 400 billion won. The five banks’ household loan balances had appeared to rebound in November, rising 1.5125 trillion won, but turned lower in December, falling 456.3 billion won. The drop widened in January to 1.8650 trillion won. If balances fall again in February, it would mark the first three-month decline since last year. The market increasingly views the government’s strict household debt stance — including last year’s June 27 and Sept. 7 measures — as taking full effect. Banks have also kept lending standards tight in line with regulators. Some analysts cautioned it remains unclear whether the decline reflects structural deleveraging or mainly supply constraints from regulation. Higher borrowing costs are also dampening demand. Deposit banks’ mortgage rates stood at 4.29% in January, the highest level in 1 year and 2 months since November 2024 (4.30%). With interest burdens rising, borrowers are delaying new loans. Real estate-related lending continues to weaken. Mortgage loans fell 1.4836 trillion won in January, switching to a month-on-month decline for the first time in 1 year and 10 months since March 2024. In February, they are expected to slip about 50 billion won from the end of January. Jeonse loans, which have declined for six straight months, are also expected to fall by more than 200 billion won in February. Unsecured credit loans, which saw more repayments due to early-year bonuses and Lunar New Year payments, also moved into decline in February. Through Feb. 26, credit loan balances at the five banks were down 250.1 billion won from the end of January. Asset-market volatility remains a key variable. With the Kospi extending its rally and topping 6,300 for the first time, some observers say investment demand using credit loans could pick up again. Optimism has spread in parts of the securities industry, with some projecting a Kospi target as high as 8,000. A banking industry official said fear of missing out is building as the market heats up. “For now, loans are being restrained by rate burdens and regulation, but if stock-market overheating continues, we cannot rule out an increase in credit loans,” the official said. 2026-03-02 06:03:00
  • South Korea’s Big 4 Banks Post Record Profit, but Bad Loans Surge More Than 50%
    South Korea’s Big 4 Banks Post Record Profit, but Bad Loans Surge More Than 50% South Korea’s four biggest commercial banks — KB Kookmin, Shinhan, Hana and Woori — posted record net profit last year, but key asset-quality indicators worsened as troubled loans climbed sharply. With more borrowers struggling to repay since the COVID-19 period, the combined volume of bad loans has jumped by more than 50% in four years, raising concerns that hidden stress could surface as rate-cut expectations fade and market rates rise. According to the financial sector on Feb. 8, the four banks’ combined net profit for last year totaled 13.9919 trillion won, up 4.9% from 13.3435 trillion won a year earlier and the highest on record. The Bank of Korea cut its benchmark interest rate twice last year, in February and May. Even so, interest income kept rising as loan assets expanded. Typically, falling benchmark rates squeeze banks’ net interest margins, but last year loan growth was enough to offset the margin decline and lift interest earnings. At the same time, troubled loans grew quickly. As of the end of December last year, the four banks’ combined bad loans totaled 12.4780 trillion won. The figure includes “precautionary” loans that are one to three months overdue and nonperforming loans (NPLs) that are more than three months overdue. It was up about 52.6% from 2021. By year-end totals, bad loans were 8.1736 trillion won in 2021, 8.7892 trillion won in 2022, 9.6781 trillion won in 2023 and 11.0639 trillion won in 2024. The share of total loans that were more than three months overdue rose to 0.30% last year, the highest level in five years. Both precautionary loans and NPL balances were the highest since 2021. NPLs rose to 4.5489 trillion won at the end of last year from 2.8643 trillion won at the end of 2021, an increase of 59%. That means more than 1.6 trillion won in unpaid debt accumulated over four years. Precautionary loans reached 7.9291 trillion won at the end of last year, up about 49% from 2021. As bad loans increased, banks’ ability to absorb losses also weakened. The NPL coverage ratio, a measure of reserves relative to bad loans, fell to 171.7% last year, dropping below 200% again for the first time in four years. Banks set aside large provisions each year, but the pace of bad-loan growth has outstripped those buffers. With the Bank of Korea signaling an end to rate cuts and market rates rebounding, concerns are growing that more bad debt could emerge. Domestic demand has weakened, and rising rates have pushed small and midsize businesses and self-employed owners closer to their repayment limits, according to the report. A financial industry official said, “Since COVID-19, the pace of deterioration has been accelerating again along with the economic slowdown,” adding, “The larger the volume of bad loans, the more provisions banks must build, which will further hurt profitability.”* This article has been translated by AI. 2026-02-08 16:03:00
  • Hana Bank Wins Partial Ruling in Lime Case; Lime, Shinhan Investment to Pay 36.4 Billion Won
    Hana Bank Wins Partial Ruling in Lime Case; Lime, Shinhan Investment to Pay 36.4 Billion Won Hana Bank won a partial victory in a lawsuit tied to the Lime Asset Management fund redemption freeze and will receive damages. The Seoul Southern District Court on Wednesday ruled partly for Hana Bank in its damages suit against Lime Asset Management, Shinhan Investment Corp. and others. The court found Hana Bank held about 38.9 billion won in bankruptcy claims and ordered the defendants to pay 36.4 billion won. Hana Bank filed the suit in January 2022, saying it suffered losses from the sale of Lime funds. It sought about 36.4 billion won in damages. The Lime scandal erupted in 2019 after allegations that Lime Asset Management improperly managed returns through irregular trading of convertible bonds and other assets tied to KOSDAQ-listed companies. As prices of stocks held by Lime funds plunged, redemptions worth 1.6 trillion won were suspended.* This article has been translated by AI. 2026-02-05 17:57:00
  • Mortgage Rates Top Unsecured Loan Rates at South Korea’s Five Biggest Banks
    Mortgage Rates Top Unsecured Loan Rates at South Korea’s Five Biggest Banks Mortgage rates at South Korea’s five biggest banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — have risen above unsecured personal-loan rates across the board, upending the usual pricing rule that secured loans cost less. The shift is increasingly being seen as a new normal, leaving borrowers facing maturities or rate resets weighing whether to use cheaper unsecured loans to pay down part of their mortgages. As of Feb. 4, the banks’ five-year fixed or hybrid mortgage rates ranged from 4.13% to 6.73% annually. Unsecured loans tied to a six-month floating rate were lower, at 3.84% to 5.42%. That put unsecured loans 0.29 percentage points cheaper at the low end and 1.31 points cheaper at the high end — a clear “rate inversion.” Typically, mortgages carry lower rates because collateral reduces the risk of loss. But all five banks are now charging more for mortgages than for unsecured credit. A key driver is diverging market rates used as loan benchmarks. Over the past year, bank bond yields moved in opposite directions by maturity. The six-month yield slipped to 2.824% as of Feb. 3 from 2.994% in early February last year, while the five-year yield climbed to 3.766% from 2.983% — up nearly 1 percentage point. Different expectations across maturities helped push the rates apart. Banks’ tighter management of household lending is reinforcing the inversion. Financial authorities changed capital rules this year to require banks to hold more risk-weighted assets, or RWA, when issuing new mortgages. The minimum RWA weight for mortgages rose to 20% from 15%, meaning banks’ financial soundness can deteriorate more even if they lend the same amount as in past years. To protect capital, banks are under pressure to curb mortgage supply and raise entry barriers, including by increasing add-on rates. Woori Bank has already raised add-on rates by 0.30 to 0.38 percentage points since Feb. 2 for apartment-backed mortgages and its “Woori Jeonse Loan” product, citing more efficient household-debt management. Other banks are also expected to follow with similar increases. Mortgage rates may not fall easily as overall household lending is expected to tighten further. Financial Services Commission Chairman Lee Eok-won said the banking sector’s household-loan growth rate was 1.8% last year and that authorities plan to set this year’s management target lower, adding that a separate management target would be set for mortgages. The unusual pricing has complicated decisions for borrowers nearing maturity or a rate change. Taking out a cheaper unsecured loan to repay part of a mortgage could reduce interest costs, but it is constrained by debt-service ratio rules and a cap that limits unsecured borrowing to 100% of annual income. With top mortgage rates nearing 7%, some borrowers have said they are afraid of upcoming rate resets. A banking industry official said the inversion is unlikely to be resolved soon because mortgage rates have become more sensitive to policy factors. The official added that banks will keep reviewing ways to reduce mortgage supply, also in light of the government’s comments about normalizing real estate finance.* This article has been translated by AI. 2026-02-04 17:03:00
  • Poland becomes strategic base for Korean companies, banks
    Poland becomes strategic base for Korean companies, banks SEOUL, November 20 (AJP) - Poland is emerging as a pivotal European base for South Korean manufacturers — and a fast-growing market for Korean financial institutions eager to support that investment. As companies pour capital into sectors such as batteries and defense, banks are moving quickly to meet rising demand for local financing. In a milestone for the industry, a Polish national has been appointed to lead a South Korean bank’s overseas branch for the first time. IBK Bank has received approval from Poland’s Financial Supervision Authority to operate a local branch, becoming the only South Korean bank granted full branch status in the country, financial industry sources said. The approval comes two and a half years after the bank opened its Wroclaw office in May 2023. The branch is preparing for launch, and its appointment of a local financial expert as branch manager marks a departure from long-standing practice: until now, every overseas branch of a South Korean bank has been headed by a Korean national. “We have been preparing to support local businesses financially and are setting up systems to meet diverse customer needs,” an IBK official said, adding that most local staff have already been hired. Other banks are also accelerating their expansion. Woori Bank opened a Warsaw branch in March, followed by Hana Bank’s branch in Wroclaw in September. The Export-Import Bank of Korea established a Warsaw office in June, while KB Kookmin and Shinhan Bank currently operate Korea Desks and representative offices. Industry officials say these institutions may also move to establish full-fledged branches. The momentum reflects Poland’s growing appeal as a financial market compared with Korea’s saturated banking environment. As of late 2023, 370 South Korean companies were operating in Poland, with cumulative investment totaling $6 billion since the two countries established diplomatic relations in 1989. Yet only a handful of Korean financial institutions have entered the market, leaving room for significant growth. Demand for corporate financing is set to rise as South Korean firms deepen their footprint. LG Energy Solution is expanding its Wroclaw battery plant, while defense manufacturers are positioning for large-scale export deals under Poland’s sweeping military modernization program. “Setting up and operating overseas branches takes time to generate returns,” a financial industry insider said. “The biggest challenge is navigating complex regulatory frameworks, which requires strong support from our financial authorities.” * This article, published by Aju Business Daily, was translated by AI and edited by AJP. 2025-11-20 15:18:15