Savings Banks Resolve 1.4 Trillion Won in Non-Performing PF Loans in First Half Through Joint Funds

Loan Delinquency Rate Expected to Improve by 1.2%p, PF Delinquency Rate by 5.8%p
Fifth Joint Fund to Be Established in the Second Half
Ongoing NPL Resolution Planned Through NPL Management Company in Q3

The Korea Federation of Savings Banks announced on June 26 that it had resolved 1.4 trillion won worth of real estate project financing (PF) non-performing loans (NPLs) through the third and fourth rounds of joint funds in the first half of this year.

The savings bank industry established joint funds of 33 billion won in January last year (first round) and 500 billion won in June (second round) to address real estate PF non-performing loans. After continued pressure from financial authorities to accelerate the resolution of real estate PF, the industry created a 200 billion won joint fund in March (third round) and a 1.2 trillion won fund this month, using these to resolve PF NPLs.

With the resolution of NPLs through the fourth joint fund, the Korea Federation of Savings Banks estimated that the industry's total delinquency rate would improve by 1.2 percentage points, and the PF-related loan delinquency rate would improve by 5.8 percentage points. Among the business sites targeted for purchase by the fourth joint fund, 100 billion won worth had already been disposed of during the fund formation process through public auctions, competitive bidding, and private contracts.

The savings bank industry plans to continue to resolve PF loan-related non-performing assets through the activation of public auctions, competitive bidding, and write-offs. The Korea Federation of Savings Banks will pursue the establishment of a fifth joint fund in the second half of the year, taking into account the real estate market situation and the pace of NPL resolution in the savings bank sector. The industry also plans to establish a constant NPL resolution channel through an NPL management company scheduled to be established in the third quarter, to ensure that non-performing assets do not become a potential risk factor.

Oh Hwakyoung, Chairman of the Korea Federation of Savings Banks, said, "The savings bank industry has been making efforts to resolve non-performing PF assets through public auctions and other measures. Although there have been difficulties in asset disposal due to insufficient market demand, the joint funds have played a supplementary role and accelerated the industry's resolution of non-performing assets."