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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Sangjin] The restructuring of real estate project financing (PF) has caused the non-performing loan ratio in the financial sector to reach its highest level in five years.
As of the second quarter, the five major financial groups (KB, Shinhan, Hana, Woori, and NH Nonghyup) reported fixed-rate non-performing loans totaling approximately 12.393 trillion won. This represents 0.62% of their total loans, the highest ratio since 0.63% in the first quarter of 2019.
Among these groups, KB Financial and Shinhan Financial had the highest ratios at 0.68%. NH Nonghyup followed with 0.59%, while Hana Financial and Woori Financial had ratios of 0.56%.
The increase in non-performing loans is attributed to stricter re-evaluations of the business viability of real estate PF projects, leading to a rise in classified bad debts. In May, financial authorities tightened the evaluation standards for real estate PF projects into four stages (good, fair, caution, and potential failure), and required financial institutions to assess these projects accordingly. Projects under the responsibility-based construction management model were also reclassified as riskier.
To prepare for potential losses from real estate PF, financial groups have also increased their provisions. In the second quarter, Shinhan Financial set aside 2.714 trillion won, Woori Financial and KB Financial added 800 billion won each, and Hana Financial allocated 408 billion won in provisions.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
