As Banks Tighten, Warrior Balloon Effect... Loans Reach 96 Trillion KRW in H1, Up 20% YoY

Announcement of First Half Year Female Warrior Sales Performance

[Asia Economy Reporter Kim Jin-ho] In the first half of this year, the loan assets of specialized credit finance companies (excluding credit card companies) amounted to 95.9 trillion KRW, marking a 20.3% increase compared to the same period last year. This reflects a balloon effect where non-bank sector loans increased due to comprehensive loan regulations imposed on the banking sector by financial authorities.

According to the "2021 First Half Specialized Credit Finance Companies Business Performance (Preliminary)" report released by the Financial Supervisory Service on the 16th, the total assets of 114 specialized credit finance companies reached 193.6 trillion KRW, up 13.1% from 171.2 trillion KRW in the same period last year.

Proprietary assets increased by 5.2 trillion KRW to 69.6 trillion KRW compared to the previous year, influenced by growth in assets related to leasing and new technology business sectors. Lease financing rose by 4.3 trillion KRW from 33.2 trillion KRW to 37.5 trillion KRW over one year.

Loan assets surged by 16.1 trillion KRW (20.3%) to 95.9 trillion KRW. Corporate loans saw a significant increase of 12.6 trillion KRW over the year. During the same period, household loans also rose by 3.5 trillion KRW from 26.7 trillion KRW to 30.2 trillion KRW.

The net profit of specialized credit finance companies in the first half reached 1.9965 trillion KRW, a sharp 50% increase compared to the same period last year. Net profits from core businesses such as leasing, installment financing, and new technology finance increased by 183.1 billion KRW year-on-year, while rental income and securities gains also rose by 222.8 billion KRW and 261.5 billion KRW, respectively.

Costs also decreased significantly. Due to a decline in delinquency rates, bad debt expenses were reduced by 120.1 billion KRW, and funding costs slightly decreased by 32.6 billion KRW due to stabilization in the specialized credit bond market.

As of the end of June, the delinquency rate stood at 1.02%, down 0.47 percentage points from 1.49% at the end of the same month last year. The ratio of non-performing loans classified as substandard or below was 1.53%, a decrease of 0.46 percentage points from 1.99% at the end of the same month last year.

A Financial Supervisory Service official analyzed, "Total assets and net profits showed a continuous upward trend, and indicators such as delinquency rates and adjusted capital adequacy ratios were favorable. It is necessary to strengthen risk management for the stable management of household debt and prepare for the possibility of future interest rate hikes."

He added, "We will continue to monitor the responses of specialized credit finance companies to the planned strengthening of leverage regulations and promote expanded liquidity disclosures."