HUG Records Net Losses for Three Consecutive Years
Cumulative Net Loss Reaches 6.7883 Trillion KRW
Government Contributes Expressway Corporation Shares
Total Government Support for HUG Nears 6 Trillion KRW Over Five Years
The government will make an in-kind contribution worth 565 billion KRW to the Korea Housing and Urban Guarantee Corporation (HUG). This measure aims to make up for HUG's growing cumulative net losses, which have been exacerbated by incidents such as jeonse guarantee accidents.
On May 28, during a Cabinet meeting held at the Seoul Government Complex in Jongno-gu, Seoul, the government approved the "HUG National Property In-kind Contribution Plan" containing these details.
The in-kind contribution will consist of 565 billion KRW worth of shares in Korea Expressway Corporation owned by the government. As a result of this contribution, the government's stake in Korea Expressway Corporation will decrease by 1.15 percentage points, from 79.68% to 78.53%. The government's stake in HUG will increase by 1.04 percentage points, from 89.20% to 90.24%. HUG's capital will rise from 4.9409 trillion KRW at the end of last year to 5.5059 trillion KRW.
The Ministry of Economy and Finance explained, "This contribution is intended to strengthen HUG's capital, thereby enabling the stable provision of public guarantees for housing project financing (PF), redevelopment projects, and unsold housing in regional areas."
HUG has posted net losses for three consecutive years as guarantee accidents, including jeonse fraud, have surged. After turning to a net loss of over 400 billion KRW in 2022, HUG recorded losses of 3.86 trillion KRW in 2023 and 2.52 trillion KRW in 2024. The cumulative net loss over the past three years amounts to 6.7883 trillion KRW.
Repeated cumulative losses reduce HUG's capital, which could lead to the suspension of HUG's operations. This is because, under current law, HUG's guarantee limit is restricted to 90 times its capital. Not only jeonse guarantees, but also PF guarantees and sales guarantees could be affected.
As a result, the government has continued to inject capital into HUG. In 2021, the contribution amounted to 390 billion KRW; in 2023, it was 384.9 billion KRW; and last year, it reached 700 billion KRW. In March last year, HUG also received an in-kind contribution of 359,647,546 shares of Korea Expressway Corporation stock, worth approximately 4 trillion KRW, from the Ministry of Land, Infrastructure and Transport. Including this latest in-kind contribution, the total amount of capital injected into HUG by the government over the past five years approaches 6 trillion KRW.
HUG stated that, in addition to this capital injection, it plans to enhance financial soundness by strengthening risk management and focusing on debt recovery, in order to establish a sustainable foundation for guarantee provision.
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