The higher Samsung Elec goes, the deeper internal collision over rewards SEOUL, May 07 (AJP) - Samsung Electronics has much to celebrate — joining the rare ranks of companies generating more than $40 billion in quarterly profit and surpassing a $1 trillion market capitalization. Yet beneath the triumph, the company faces growing internal strains that mirror the strengths and vulnerabilities of the broader Korean economy, heavily hanging on the semiconductor boom. The founding principle of “One Samsung” is showing visible cracks as divisions drift further apart — financially, culturally and strategically. The gap is most stark between the Device Solutions (DS) division, which oversees semiconductors, and the Device eXperience (DX) division, responsible for mobile devices and home appliances. In the first quarter, DS generated 53.7 trillion won ($39.2 billion) in operating profit, accounting for nearly 94 percent of the company’s earnings. DX contributed a comparatively modest 3 trillion won ($2.2 billion). The widening imbalance has begun spilling into labor relations. According to union sources, more than 2,500 DX employees recently withdrew from the representative labor union, SELU, arguing that they were being sacrificed to bankroll ever-fatter paychecks for semiconductor workers. Unionized employees within the DS division counter that their demands are aimed at ensuring compensation remains competitive with industry rivals. “The friction is less about the absolute amount than about maintaining rewards that remain competitive against our peers,” a union official from the DS division said. The official worried that prolonged disputes over compensation could eventually accelerate an outflow of talent to rival chipmakers, posing a longer-term threat to the company’s competitiveness. Discontent within DX also reflects growing anxiety over the rapid rise of Chinese competitors in consumer electronics and home appliances. Amid deteriorating performance, Samsung has decided to withdraw its money-losing home appliance and television sales operations in China. On Wednesday, the company informed local partners and employees of the decision, citing intensifying competition and a rapidly shifting business environment. While Samsung will retain its NAND flash production facility in Xi’an and its appliance factory in Suzhou, the withdrawal has already triggered demands from local employees for “restructuring incentives.” According to industry trackers, Samsung — which once commanded nearly 20 percent of China’s television market in 2005 — has seen its offline retail market share collapse to just 3.62 percent as of April 2026, far behind local competitors. The picture is even bleaker in white goods, where Samsung’s market share in refrigerators and washing machines has fallen below 0.5 percent this year. China’s consumer electronics market has become brutally competitive, with rapid technological catch-up by domestic firms and growing concerns over technology leakage making profitability increasingly elusive for foreign players. China's ascent is no longer confined to the home turf. According to 2025 data from Counterpoint Research, Chinese manufacturers TCL and Hisense captured a combined 25 percent share of the global TV market by shipment volume, overtaking the combined 24 percent held by Samsung and LG. Samsung accounted for 15 percent and LG 9 percent. Still, "it would be unreasonable to interpret this as Samsung giving up on home appliances altogether, as its premium image remains strong in many global markets,” said Hwang Yong-sik, a business administration professor at Sejong University. “A period of selection and concentration has arrived, and Samsung appears to be reinforcing its portfolio around high-tech AI and semiconductors.” Hwang added that the simultaneous labor strife is also a structural byproduct of managing a sprawling conglomerate. Unlike SK hynix, which effectively operates as a pure semiconductor company, Samsung houses multiple strategic business units under a single corporate structure, making differentiated, performance-based compensation an almost inevitable source of tension. “This labor-versus-labor conflict is an expected outcome stemming from the need to distribute incentives differently across business units, combined with South Korea’s institutional framework allowing multiple unions,” Hwang said. “It is not simply a management failure, but a structural issue inherent to Samsung’s diversified portfolio and Korea’s labor system.” Unionized workers have warned of a potential full-scale strike later this month if negotiations remain deadlocked — a scenario that could inflict serious damage on Samsung’s core semiconductor operations, which run continuously around the clock. “A court will rule on May 20 on the company’s injunction request seeking to block a strike on grounds that semiconductors constitute a strategic national industry.” Although semiconductor fabrication plants are highly automated, industry analysts estimate that even partial disruptions to logistics or manual processes could result in substantial daily losses. Should disruptions escalate into a full production halt, estimated daily losses could climb as high as 1 trillion won ($730 million). Any deterioration in chip yields or wafer damage caused by operational interruptions would be especially costly as Samsung races to meet surging global demand for high-bandwidth memory (HBM) chips. Shares of Samsung Electronics hit new historic high, closing Thursday 2.8 percent up at 273,500 won. 2026-05-07 17:20:28

S. Korean AI firm Upstage acquires web portal Daum to bolster sovereign AI race SEOUL, May 07 (AJP) - In a bid to build South Korea's sovereign AI foundation model, Upstage, one of the country's artificial intelligence powerhouses, has finalized the acquisition of web service portal Daum for an undisclosed amount, the AI company said Thursday. Daum is South Korea's iconic web service that was launched in 1995 as an arts and entertainment service portal. The service gradually upgraded to add other services such as web search, email, online magazine, and news to garner more than one million registered users in 1998. The web service's operator Daum Communication, later merged with messenger app giant Kakao to become Daum Kakao in 2015, and Daum's operating division was separated by Kakao in December 2025 into a subsidiary named AXG. According to Upstage, the acquisition deal was signed as a share swap, with the AI company acquiring the entire 100 percent stake in AXZ held by Kakao, while Kakao received newly issued shares in Upstage in return. The acquisition was made about three months after Upstage and Kakao signed a memorandum of understanding (MoU) in January this year. Through the acquisition of the web service portal, Upstage plans to combine its Solar large language model (LLM) with Daum's web search engine and context data to build "Context AI," a service designed to understand user intent and context rather than just matching keywords. Upstage said that the acquisition will eventually lead the company to develop a next-generation AI portal built on South Korean technology and data. "The combination of Upstage's technology and a 30-year-old national portal will mark a symbolic turning point for the AI industry, opening a new era of AI portals," Upstage CEO Kim Sung-hoon said in a statement. One of the central questions surrounding the deal concerned Daum's workforce. Upstage said Daum will continue to operate as an independent legal entity with no personnel changes. The company also pushed back against speculation that Daum's user data would be funneled into Solar's training pipeline. Bae Sung-beom, technical communications lead at Upstage, told AJP in a written response that the term 'training' in the LLM context refers specifically to the pre-learning and post-learning of foundation models and does not mean user data will be used for the machine learning of AI systems. "This kind of data is absolutely not used," Bae said. "It is impossible without the consent and cooperation of users, who are the data subjects. And even with consent, it must comply with relevant laws, including the Personal Information Protection Act." For Upstage, the acquisition lands at a pivotal moment. The 2020-founded company became South Korea's first generative AI unicorn last year after an 180-billion-won ($130 million) Series C round and has signaled plans for a KOSPI listing this year. Its Solar Pro 2, released last summer, became the first Korean-developed LLM ranked as a global frontier model. The current model, Solar Pro 3, was released in March. Upstage is also leading one of four consortia in South Korea's national "sovereign AI" project. For Kakao, this deal allows it to monetize a long-stagnant asset while preserving indirect exposure through its new equity stake in Upstage, a common pattern as the conglomerate retreats from non-core businesses amid regulatory pressure. 2026-05-07 17:13:58

South Korea, Japan hold first vice ministerial '2+2' talks in Seoul SEOUL, May 7 (AJP) - South Korean and Japanese foreign and defense officials met in Seoul on Thursday to discuss ways to strengthen security cooperation. In the format of their first "2+2" vice ministerial meeting, South Korea's First Vice Foreign Minister Park Yoon-joo and Vice Defense Minister Lee Doo-hee met with their respective counterparts Takehiro Funakoshi and Koji Kano. Thursday's meeting, which came after the previous one in Tokyo in November 2024, was upgraded to vice ministerial level this time. Such talks, held at the working level under a 1997 agreement between the two neighboring countries, have been suspended and resumed at times as bilateral ties have fluctuated. With detailed discussions yet to be disclosed, the two sides were believed to have exchanged views on key security issues including North Korea's nuclear threat and the prolonged conflict in the Middle East. With both countries importing large amounts of energy from the region, they were also likely to explore cooperation to reopen the Strait of Hormuz and bolster energy security. 2026-05-07 17:01:46

How AI is erasing entry-level career path in Korea SEOUL, May 7 (AJP) - Near midnight in Seoul's Gangnam district, the lights inside law offices still burn long after neighboring buildings have gone dark. But for many junior lawyers, the exhaustion no longer comes from endless paperwork alone. Artificial intelligence has sharply shortened the time needed for much of the grunt work that once consumed young associates' nights — document reviews, precedent searches and first-pass drafting. Yet the workload itself has not eased. Many firms, increasingly reliant on AI tools, are simply hiring fewer junior workers to handle what remains. For 37-year-old law firm assistant James Kim, complaining is hardly an option in a profession where even landing an entry-level position has become fiercely competitive. "The fear now isn't overwork," he said. "It's eventually not being needed." Across South Korea's white-collar industries, AI is beginning to reshape not only how young professionals work, but whether they are hired at all. As firms automate more of the routine tasks once assigned to junior employees, younger workers increasingly worry that AI is eroding the apprenticeship system through which future experts were traditionally trained. The anxiety is becoming increasingly visible in employment data. According to the Bank of Korea, nearly 98 percent of the roughly 211,000 youth jobs lost between July 2022 and July 2025 were concentrated in industries with high AI exposure. Employment in South Korea's professional, scientific and technical services sector fell by about 105,000 in February from a year earlier, marking the steepest decline since the current industrial classification system was introduced in 2013. For many younger professionals, the labor market increasingly feels less like the beginning of a career than a struggle for survival. "Law school graduates attend bar association programs during the day and spend hours at night sending out resumes," Kim sighed. The shift is exposing a growing paradox of the AI era. The same tools boosting productivity may also be weakening the apprenticeship structure through which junior workers traditionally became experts. "These tasks were not glamorous, but they were often the training ground through which young professionals learned how the business works," said Kwon Hyeok-koo, a professor of Nanyang Technological University's business school. For decades, junior employees learned through repetition — researching cases, drafting reports, making mistakes and receiving corrections from senior colleagues. AI is now compressing or bypassing many of those stages altogether. According to Yoo Joshua, a lawyer at a Seoul-based law firm, younger lawyers are losing the process through which they once learned "how to think" in practice as AI has taken up much of their work. The longer-term risk is not simply job displacement but erosion of professional judgment itself. Lyse Langlois, a professor of Industrial Relations at Laval University and director of the International Observatory on the Societal Impacts of AI and Digital Technology (OBVIA) said younger workers risk developing what she described as an "autopilot" relationship with AI — relying on AI outputs passively without critically questioning or verifying them. "If people stop critically examining AI-generated outputs, they may gradually stop developing independent judgment altogether," she warned. Kwon said reducing junior hiring may appear efficient in the short run, but could damage the future supply of skilled professionals. The key challenge, he said, is whether younger workers can still develop the judgment needed to recognize and correct AI's mistakes. Citing the "jagged frontier" findings from a recent field experiment by global consulting firm Boston Consulting Group, Kwon said AI can improve performance within its capability range but may also increase errors when users overtrust plausible but incorrect outputs. As a result, he said, early-career skills are shifting toward AI orchestration, verification and judgment under uncertainty. "It changes the role of junior workers from 'doing the first version' to 'supervising, checking, and improving the machine-generated first version,'" Kwon said, noting that entry-level professionals now need different skills, including knowing what questions to ask, recognizing flawed outputs, understanding company-specific data and judging whether AI-generated answers make sense in context. Kwon also warned, "AI can widen gaps when the valuable part of work depends on tacit knowledge, client relationships, reputation, or contextual judgment." The transformation is already reshaping hiring patterns across industries. Kwon, a 37-year-old architect who now leads an AI-related division at his firm, said generative AI tools have radically accelerated conceptual design work over the past several years. "Tasks like generating images or exploring design alternatives have become dramatically faster," he said. "Tools like Midjourney and Nano Banana — AI-based image and concept visualization tools — allow architects to visualize multiple design concepts almost instantly." Yet he said the final stages of professional work remain deeply human. "You still need people to refine prompts, interpret client demands, apply structural logic and ensure compliance with regulations," he said. "AI can generate options, but judgment remains a human responsibility." Yet, many firms are cutting junior hiring while seeking more experienced workers with proven decision-making skills. "In architecture, entry-level hiring has dropped by nearly 50 percent, while demand for workers with five to 10 years of experience continues to grow," he said. "Today, firms care less about pure design ability and more about whether someone can strategically use AI tools while coordinating across multiple disciplines." Kwon of Nanyang argued that firms using AI mainly as a cost-cutting tool may boost short-term efficiency while weakening long-term talent development. "The bigger risk is that it erodes the apprenticeship model through which young professionals become experts," he said. "Firms that redesign training around AI will benefit; firms that only cut junior tasks may face a future talent shortage." At the education level, Kwon stressed the need for universities to adapt their training models as AI becomes embedded in professional work. "Universities need to teach AI literacy together with domain reasoning," he said. "Students should learn not only how to use AI tools, but also how to challenge them, audit them and combine them with human judgment." He also warned that Korea faces additional structural risks because adult-learning participation remains relatively low. Citing OECD data, Kwon noted that Korea's adult-learning participation rate stands at about 13 percent, compared with an OECD average of 40 percent, underscoring the need for stronger lifelong-learning systems, reskilling incentives and support for smaller firms with limited training resources. Erik Cambria, professor of Artificial Intelligence at Nanyang Technological University (NTU) similarly argued that future education systems will need to prioritize conceptual understanding over task execution. "The value in the emerging 'relationship economy' increasingly comes from understanding context, intent and human nuance rather than simply producing outputs," he said. He added that education and workplace training should place greater emphasis on critical thinking, interdisciplinary understanding and the ability to work with — and critically assess — AI systems. Not every profession, however, is experiencing AI as a direct threat. In medicine, AI is increasingly seen as a tool that reduces repetitive work while allowing doctors to focus more on diagnosis and their core responsibilities. South Korea's medical and social welfare sector added 294,000 jobs in March from a year earlier, the largest increase among all industries, sharply contrasting with declines in technical fields where employment fell by 61,000 during the same period. Benjamin Lee, a 36-year-old medical resident at a university hospital in Incheon, said AI has already reduced much of the repetitive administrative workload inside hospitals. He said the impact varies by specialty. "Radiology and emergency medicine are seeing the fastest changes because AI can quickly assist with analysis," he said. "Tasks like organizing patient records, chart documentation and scheduling are becoming increasingly automated, which allows doctors to focus more on judgment and treatment." Data-heavy departments such as pathology and cardiology have also seen major efficiency gains, he added. By contrast, surgical specialties and psychiatry — where face-to-face patient interaction remains central — have experienced relatively limited disruption. The shift is increasingly reflected in broader industry research as well. According to the Anthropic Economic Index, AI use is increasingly centered on "augmentation" — working alongside humans — rather than full automation replacing them. The report found that while AI is reducing repetitive tasks, it is simultaneously increasing the importance of higher-level responsibilities such as management, contextual judgment and decision-making. In effect, researchers said, AI is driving both "deskilling" in routine work and "upskilling" in more complex, judgment-intensive roles at the same time. Experts say adapting to that transition will require a redesign of education and workplace training around an "AI apprenticeship model." Rather than banning AI-assisted work, Kwon said educators should require students to explain what prompts they used, what outputs they verified and why they accepted or rejected certain results. He said organizations still need to preserve some foundational work without AI so junior employees can understand the underlying logic of their profession. "At the same time, managers should create AI-assisted assignments where juniors must explain what the AI produced, what they accepted or rejected, and why," he said, adding that "managers should evaluate the process, not only the final output." He also said companies should require junior workers to document how they used AI, including what prompts they entered, what assumptions they checked, which sources they verified and what risks remained. According to Kwon, this would turn AI from an invisible shortcut into part of the learning process itself. Kwon further emphasized the need for more structured mentoring systems, warning that while AI can make younger employees more independent, it may also reduce interactions with senior colleagues and make it harder for managers to detect knowledge gaps. "Firms should rely less on informal help-seeking and instead introduce more deliberate check-ins, case reviews and post-task debriefings," he said. Langlois raised what she called a more fundamental question. "What do we want to value as a society?" she asked. "A model driven by hyper-competitiveness and innovation, at the risk of leaving a significant portion of the population behind, or one in which everyone has a place, and where AI serves human beings?" Shortly before 2 a.m. in Seoul's Gangnam district, the lights inside an architecture office remained on. AI-generated renderings filled one side of a monitor. Structural calculations covered the other. Coffee cups sat stacked beside keyboards. The output was arriving faster than ever. But judgment — and responsibility for the outcome — still rested with humans. 2026-05-07 16:36:21

People Power Party Abstains from Constitutional Amendment Vote, Proposes New Committee People Power Party lawmakers abstained from voting on a constitutional amendment at the National Assembly on May 7. They proposed forming a bipartisan committee in the second half of the 22nd National Assembly to discuss a comprehensive amendment covering everything from the preamble to the restructuring of power. After a party meeting, lawmakers stated, "We will resolutely oppose any rushed, piecemeal constitutional amendments that disregard the public's will," and pledged to prepare a responsible amendment that upholds the spirit of the Constitution and the rule of law.They emphasized that the value of the Constitution lies in the protection of the rule of law and the consensus of the people, describing it as the most sacred social contract between the citizens and the state. They asserted that the sovereign people have delegated power to the state through this contract, and both the president and the National Assembly, as representatives of the people, must faithfully uphold constitutional principles.The lawmakers criticized the government and ruling party for attempting to undermine the judicial system with measures like the 'Special Prosecutor Law on Dismissal of Charges,' which they described as a plot to destroy the judiciary. They warned that pushing for unilateral amendments that violate the rule of law is a betrayal of the people and a direct challenge to the sovereign.They outlined five principles for the proposed amendment, insisting it should enhance and restore the spirit of the Constitution rather than weaken the separation of powers. They called for a public discourse involving the National Assembly, civil society, and academia to inform the amendment process.The lawmakers stressed that the preamble must reflect a unified historical perspective that safeguards Korea's legitimacy, incorporating significant events such as the Busan Uprising, the May 18 Democratic Movement, the founding of the nation, the Korean War, and other pivotal moments in the history of South Korea's democracy.They argued that amendments should not be conducted behind closed doors by those undermining the rule of law but should instead be a 'people-participatory amendment' centered on the sovereign. They urged an end to political maneuvers that divide the nation and called for bipartisan cooperation based on checks and balances. Furthermore, they stated that constitutional amendments should not be used as a political tool during election periods but should be pursued calmly when elections are not imminent.* This article has been translated by AI. 2026-05-07 16:30:43

Daegu and Gyeongbuk Join Forces to Boost Regional Tourism To address the concentration of foreign tourists in Seoul and the surrounding areas, Daegu and Gyeongbuk have partnered to enhance regional tourism. The government aims to revitalize local economies and combat population decline by promoting tourism, with plans to develop Daegu International Airport as a gateway for foreign visitors. Government Promotes Local Tourism to Combat Population Decline Recently, the Ministry of Culture, Sports and Tourism has focused on creating specialized tourism hubs to attract 20 million foreign tourists, aiming to distribute tourism demand nationwide and invigorate local economies. In line with this initiative, the Korea Tourism Organization's Daegu-Gyeongbuk branch convened a meeting on May 7 at the Daegu Inter-Burgo Hotel to establish a regional tourism network. The organization aims to facilitate global connections and expand air routes, addressing the limitations of individual local governments. About 40 representatives from Daegu, Gyeongbuk, Gyeongju, Andong, local tourism agencies, Korea Airports Corporation, and the travel industry participated. Enhancing Accessibility for Tourists Arriving at Daegu Airport The meeting focused on strengthening the international competitiveness of Daegu International Airport. Plans include significantly increasing flights from nearby countries to facilitate easier access for international tourists. Efforts will be made to secure airport slots for incoming flights and to enhance transportation networks, ensuring seamless travel from the airport to Daegu and major attractions in Gyeongbuk. Additionally, the region will develop accommodation infrastructure to promote extended stays and launch tailored campaigns to kickstart travel experiences upon arrival. Developing Unique 'K-Heritage' Tourism Routes In the afternoon, discussions shifted to creating unique cross-regional tourism products that blend local resources to attract foreign visitors. A notable proposal combines Andong's traditional culture, Gyeongju's World Heritage sites, and the significance of hosting the Asia-Pacific Economic Cooperation (APEC) summit next year, alongside trendy attractions like K-pop from Daegu. This initiative, dubbed 'K-Heritage,' aims to offer distinctive travel experiences that merge tradition and modernity. The tourism organization plans to leverage its global network and online travel platforms to support tailored marketing strategies for different countries. Park Soo-hyun, head of the Korea Tourism Organization's Daegu-Gyeongbuk branch, emphasized the need for regional collaboration to transform Daegu and Gyeongbuk into key destinations for foreign tourists. He stated, "Breaking down barriers between local governments is essential for effective cooperation, and we will work together with airports, airlines, and the travel industry to create substantial demand for inbound tourism."* This article has been translated by AI. 2026-05-07 16:28:45

Internet Banks Struggle to Find Sustainable Growth Amidst Competition Concerns are growing that internet banks, since their inception, have focused solely on superficial growth without establishing sustainable growth drivers. Their business models heavily rely on household loans, and their interest rates are less competitive than those of traditional banks. Initially aimed at reducing costs through online operations, these banks are now caught in a fierce competition for customer acquisition, neglecting the development of differentiated revenue models.As of the first quarter of this year, Kakao Bank has attracted 27 million customers, capturing 78% of the customer base of the largest traditional bank, KB Kookmin Bank, which has 34.7 million customers. K Bank, the first internet bank in South Korea, has 16.07 million customers, while Toss Bank has 14.23 million, surpassing Shinhan Bank's mobile platform, SOL, which has 10.42 million users.While these banks initially gained customers with low interest rates, they are now losing their competitive edge in interest rates compared to traditional banks. According to the Korea Federation of Banks, the interest rate spread for household loans in the first quarter was 2.02% for Kakao Bank, 2.28% for K Bank, and 2.09% for Toss Bank, compared to just 1.77% for the five major traditional banks (KB Kookmin, Shinhan, Woori, Hana, and NH Nonghyup).In the realm of general credit loans, Kakao Bank's interest rate spread is 2.78%, K Bank's is 2.29%, and Toss Bank's is 3.20%, all exceeding the average rate of 1.76% for traditional banks. Unlike traditional banks, internet banks do not operate physical branches, allowing them to focus on household loans and easily generate interest income.The high interest rate spreads have resulted in increased profitability. In the first quarter, Kakao Bank reported a net interest margin (NIM) of 2%, surpassing the average of 1.69% for the five major banks, while K Bank recorded 1.57%. Last year, Toss Bank achieved a high margin of 2.55%. However, the initial goal of providing differentiated digital services with lower costs is now being overshadowed by a focus on superficial growth.Critics warn that a business structure fixated on growth could ultimately harm customers. The banks are perceived as vulnerable in terms of long-term risk management and profitability compared to traditional banks, raising concerns that their current strategies may not be sustainable. With household loans making up 90% of their portfolios, their offerings are limited to personal loans and advertising revenue from platforms, leading to questions about their original mission.A financial industry insider stated, "The focus on expanding interest rate spreads and short-term funding strategies clearly has limitations in terms of sustainability. Given the high proportion of so-called cherry-picking customers who move based on interest rates or promotions, it will be challenging to secure a stable funding base. Ultimately, the risk of passing unfavorable conditions onto consumers during interest rate fluctuations cannot be ignored, so a competition model based on soundness and sustainability needs to be explored."* This article has been translated by AI. 2026-05-07 16:27:29

Shinhan Financial Group Leads in Inclusive Finance Initiatives Shinhan Financial Group is gaining attention as the fastest-moving financial group in response to the government's inclusive finance initiatives. Under Chairman Jin Ok-dong, the group has revived the 'microfinance' program, previously used as a policy finance tool, to differentiate itself in the market.As of May 7, Shinhan Financial has actively integrated microfinance into its inclusive finance strategy, enhancing its presence. Microfinance provides low-interest startup and operational funds to low-income individuals without requiring collateral or guarantees, aimed at supporting financially vulnerable groups. Although launched during the Lee Myung-bak administration and expanded under the Moon Jae-in administration, its significance had diminished in recent years.The current government had not considered utilizing microfinance, but Shinhan Financial has adopted it as a tool for inclusive finance. Chairman Jin recognized its potential during a review of existing inclusive finance systems, suggesting, "Let’s use existing systems efficiently" instead of creating new ones.This approach has been praised for balancing speed and effectiveness, reducing the time needed to design new systems while clearly defining the support targets. Following Shinhan Financial's proposal, other financial groups are reportedly exploring similar models.The proactive efforts of Chairman Jin and Vice Chairman Ko Seok-hun have been noted, with the group quickly generating ideas in response to messages from financial authorities. Shinhan Financial was the first to propose debt forgiveness for disabled individuals, reflecting this trend.Shinhan Financial plans to contribute 100 billion won to the Shinhan Microfinance Foundation to support diligent repayers and develop new policy loan products. Additionally, it aims to convert all diligent repayment customers from savings banks to bank products within the first half of the year and operate cooperative finance loan products using its platform, distinguishing itself from other financial groups.A financial authority official stated, "Shinhan Financial is notably quick in its responses and frequently proposes ideas, making it one of the active players in inclusive finance."* This article has been translated by AI. 2026-05-07 16:25:37

Internet Banks Face 'Cherry-Picking' Controversy Amid Lending Criticism Internet banks are facing renewed scrutiny over their lending practices, particularly regarding their role in inclusive finance. Critics argue that these banks primarily serve higher-credit borrowers, contradicting their founding purpose. According to a report from the Korea Federation of Banks on May 7, the three internet banks—K-Bank, Kakao Bank, and Toss Bank—had a combined 33.1% of their credit loan balances allocated to borrowers in the bottom 50% of credit scores as of the end of last year, down from 33.8% the previous year. Individually, K-Bank and Kakao Bank saw declines of 2.8 and 0.1 percentage points, respectively, with figures of 32.5% and 32.1%. Toss Bank, however, increased its share to 34.9%, a rise of 0.9 percentage points. Overall, the proportion of loans to low- and mid-credit borrowers remains just above the government guideline of 30%, showing little sign of significant growth. The share of new loans to low- and mid-credit borrowers reflects a similar trend, with K-Bank and Kakao Bank barely exceeding the 32% threshold at 34.5% and 35.7%, respectively. This raises concerns that the banks are prioritizing target fulfillment over genuine expansion of inclusive finance. While internet banks cite soundness management as a reason for their cautious approach to expanding loans to low-credit borrowers, critics argue that this stance undermines their intended role in promoting inclusive finance. They warn that limiting supply under the guise of risk management blurs the distinction between internet banks and traditional banks. Kim Yong-beom, head of the Presidential Policy Office, recently criticized this trend on social media, stating, "Household loans should not be confined to high-credit borrowers in a safe bubble. Cherry-picking is not the mission of internet banks." He condemned the practice of selectively serving only financially stable customers. Kim also challenged financial authorities, questioning whether they have inadvertently strengthened existing power structures under the pretext of maintaining soundness. This has led to speculation that authorities may intensify their oversight of internet banks' lending to low-credit borrowers and consider adjustments to related policies. Seo Ji-yong, a professor at Sangmyung University, noted that internet banks have focused on higher-credit borrowers to avoid deteriorating financial soundness. He acknowledged that even with demands to expand loans to low-credit borrowers, the inherent selection process raises barriers. He added that authorities should consider providing incentives and policy adjustments to support internet banks in this area.* This article has been translated by AI. 2026-05-07 16:24:14

HUG to Release Villa Prices and Quality Jeonse Listings to Prevent Rental Fraud The Housing and Urban Guarantee Corporation (HUG) is set to introduce new services that provide price information for villas and multi-family homes, along with a certification system for quality jeonse listings. This initiative aims to reduce information asymmetry in the non-apartment market, where rental fraud has been prevalent. HUG plans to expand its role beyond a guarantee institution to a public platform that encompasses housing supply, financial services, and data offerings. During a press briefing marking his 100 days in office on May 7, Choi In-ho, HUG's president, stated, "We will utilize our 700 billion data points to enhance housing stability for the public." He emphasized the need to provide reliable price information for villas and multi-family homes, which are often difficult to verify compared to apartments, to protect low-income renters. HUG's 'Safe Villa Price' initiative will combine appraisal data and actual transaction information to calculate appropriate prices by region and property age. This information will be presented through a map-based visualization service. The non-apartment market has faced challenges due to limited transaction examples and significant price variations, making it hard for tenants to assess fair rental prices. Additionally, HUG plans to implement a certification service for quality jeonse listings. This will involve evaluating properties based on deposit amounts, priority claims, and regional average debt ratios to assign a certification mark to lower-risk listings. Collaborations with proptech platforms like Naver Real Estate and Zigbang will allow tenants to assess risks before signing contracts. The Safe Jeonse app will also be enhanced. HUG intends to strengthen its AI-based risk assessment service by integrating data from six agencies, including the Ministry of Land, Infrastructure and Transport and the National Tax Service. Currently, the app offers risk assessments, landlord information checks, and guarantee applications, with over 1 million downloads and 2.8 million uses. Changes to the jeonse guarantee review process are also anticipated. HUG is considering a pre-review system that would allow for guarantee eligibility checks after the deposit is paid but before the final payment. Choi noted, "Implementing pre-reviews will significantly increase accident prevention rates." However, the direct incorporation of landlord credit ratings into the guarantee review process is not currently under consideration, as HUG focuses on making it easier for tenants to obtain guarantees. HUG also announced plans to support housing supply. This year, it aims to increase the supply of its Dundeun Jeonse housing from 1,800 units last year to 3,000. The scope of purchases will expand from non-apartment properties to include apartments with over 150 units. Choi mentioned that discussions are ongoing to further increase Dundeun Jeonse acquisitions in response to rising rental pressures in Seoul. The corporation is also enhancing support for youth housing and construction rental housing. HUG has improved the rental guarantee system for youth housing in collaboration with Seoul City, aiming to expedite occupancy for about 2,000 units across 10 projects that have not yet secured tenants. It anticipates facilitating the supply of approximately 18,000 units in Seoul by 2028. For construction rental housing, HUG has revised guarantee extension criteria and appraisal methods. Previously, exceeding debt ratios required additional collateral for guarantee extensions, but this has been improved to allow extensions without extra financial burdens. HUG expects this will enhance conditions for around 1,000 projects, totaling 260,000 units of construction rental housing. HUG also unveiled measures to stabilize the project financing (PF) market. It plans to raise the guarantee limit for PF special guarantees from 50% to 70% and eliminate construction ranking restrictions. HUG aims to provide 2 trillion won in special guarantees for small construction firms by 2027, having already achieved 90% of this goal as of late April. Choi affirmed, "We will strive to expand PF special guarantees beyond our targets." Addressing unsold properties in local areas is another priority. HUG plans to expand its pre-completion unsold property purchase program and enhance mortgage guarantee support for unsold properties post-completion. Choi reported that there are currently about 30,000 unsold units in local areas, with 10,000 under review, and expressed commitment to achieving this year's goals based on previous successes in supporting 3,000 units with 850 billion won in guarantees. Additionally, HUG plans to launch four new products this year, including guarantees for relocation costs in housing regeneration, public maintenance project loans, rental guarantees for senior welfare housing, and securitization of trust fee claims. Choi emphasized the importance of establishing a comprehensive and robust guarantee system to promote housing supply.* This article has been translated by AI. 2026-05-07 16:22:12