Shinhyup Central Association Cleans Up 1 Trillion Won in Non-Performing Loans to "Strengthen Soundness"

The National Credit Union Federation of Korea (NACUFOK) announced on the 1st that it will undertake the disposal of non-performing loans (NPLs) totaling 1 trillion KRW. This measure aims to manage the soundness of member cooperatives whose business environment has deteriorated due to the real estate market slump and prolonged high interest rates, and is scheduled to be implemented in the second half of this year.

Recently, NACUFOK formed a task force (TF) for delinquency management and is making company-wide efforts to strengthen the soundness of cooperatives. First, through the NPL disposal subsidiary ‘KCU NPL Daebu,’ which is set to begin operations this month, it plans to resolve NPLs worth 350 billion KRW by the end of the year. Additionally, NACUFOK will purchase 500 billion KRW through an NPL fund it leads, disposing of a total of 850 billion KRW in NPLs.

There is also a plan to bundle NPLs from credit unions nationwide and sell them collectively on the market. To this end, a bidding announcement for selecting a sales agent will be issued in the second half of this year.

Furthermore, in line with the financial authorities’ policy to strengthen soundness management, NACUFOK intends to increase provisions for loan losses on real estate and construction industry loans to enhance loss absorption capacity and proactively respond to potential future risks.

To improve the stability of joint loans handled by multiple cooperatives, NACUFOK directly supports credit evaluation. Since September last year, the scope of evaluation support has been significantly expanded from loans over 10 billion KRW to those over 7 billion KRW, focusing on managing the soundness of new loans.

As of the end of May, the liquidity ratio of credit unions stands at approximately 152.6%. NACUFOK holds funds amounting to 28.7 trillion KRW available for liquidity supply and actively supports the overall liquidity of credit unions by flexibly supplying funds through borrowing agreements between the federation and member cooperatives when necessary.

Woo Uk-hyun, Director of Management at NACUFOK, stated, “In these severe times, the federation will implement comprehensive support measures to improve the soundness of member cooperatives,” adding, “By resolving NPLs early, we will significantly enhance the overall soundness of credit unions within this year.”