Borrowers Who Took 'Coin Debt Investment' Face Delinquency Rate Crisis Approaching 4%

Analysis of Credit Loan Delinquency Rates Among Jeonbuk Bank Virtual Investors Contracted with Copax
Delinquency Rate Rose to 3.86% Early This Year
Significantly Higher Than Domestic Banks' Credit Loan Delinquency Rate of 0.6%
Assemblyman Kim Seong-ju: "Concerns Over Bank Soundness Deterioration Due to Coin Debt Investment"

The delinquency rate of borrowers who engaged in 'coin debt investment' is rapidly increasing. It has been revealed that the delinquency rate of virtual asset holders' personal credit loans at Jeonbuk Bank is approaching 4%. Jeonbuk Bank signed a contract with the virtual asset exchange Kopax last April to provide real-name accounts that allow investment in Korean won.

According to the office of Kim Sung-joo, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, the 'personal credit loan delinquency rate (over 1 month) of Jeonbuk Bank's virtual investors' was 3.67% in March this year. It even rose to 3.86% in February. Compared to only 0.55% as of July last year, this is a sharp increase. This level is also significantly higher than the delinquency rate of credit loans at domestic banks, which was 0.64% as of February.

The rapid rise in delinquency rates is due to two reasons. Investors suffered losses as the virtual asset market began to collapse since last year, and on top of that, rising interest rates have made repayment more difficult. A bank official said, "Coin borrowers are being hit by a double punch of falling coin prices and interest rate hikes," adding, "Although the virtual asset market has recently risen slightly, it is still at the bottom compared to last year."

Looking at the 'personal credit loan balance of Jeonbuk Bank's virtual investors,' it peaked in December last year (about 9.28 billion KRW) and has somewhat decreased as the coin market declined. As of March this year, the balance was about 8.36 billion KRW, of which the amount overdue for more than one month reached 310 million KRW.

As the risk of insolvency due to coin debt investment grows, Jeonbuk Bank is also increasing its provisions. The provision ratio as of March was 6.43% (about 540 million KRW). The size of provisions has more than doubled compared to July last year.

Concerns are emerging that the risk in the virtual asset market is likely to spill over to banks as the delinquency rate of borrowers who engaged in debt investment rapidly increases. Assemblyman Kim Sung-joo said, "Considering the case of Jeonbuk Bank, we can infer the situation of coin investors who borrowed from other banks," adding, "Since the linkage between banks and the virtual asset market was revealed in the Silicon Valley Bank incident, we must preemptively block the risk that coin debt investment could deteriorate bank soundness."