Saemaul Geumgo Enhances Financial Soundness with 3.8 Trillion Won Sale of Non-Performing Loans

Sale of 3.8 Trillion Won in Non-Performing Loans in H1 for Delinquency Management
Efforts to Strengthen Financial Soundness Through New Subsidiary
Special Inspection of 100 Branches by Ministry of the Interior and Safety
Reinforcing Identity as a Community Financial Institution Through Inclusive Finance

The National Credit Union Federation of Korea (Saemaul Geumgo) announced on August 28 that it will make every effort this year to improve its financial soundness, while also fulfilling its core role as a community financial institution to ensure that its functions for low-income individuals are not diminished.

In accordance with the policies and guidance of the Ministry of the Interior and Safety and financial authorities, Saemaul Geumgo is gradually resolving the real estate project financing (PF) issues, which have been identified as the fundamental cause of its soundness problems. In the first half of this year, Saemaul Geumgo sold a total of 3.8 trillion won in non-performing loans, effectively keeping its delinquency rate at an appropriate level. This figure represents a 90% increase compared to the approximately 2 trillion won sold in the first half of the previous year. To enhance risk management and loss-absorbing capacity based on business feasibility assessments, Saemaul Geumgo has been continuously increasing its loan loss provisions to prepare for potential losses.

Saemaul Geumgo is diversifying its delinquency management methods by exploring new non-performing loan sales channels, not only through its subsidiary MCI Daebu, but also through Korea Asset Management Corporation (KAMCO), United Asset Management Corporation (UAMCO), and asset securitization methods. In particular, the "UAMCO-MG PF Normalization Fund," established in September last year with a scale of 500 billion won, has accumulated investment commitments of 180 billion won and is being actively utilized to normalize distressed PF project sites through restructuring.

Through the official launch of "Saemaul Geumgo Asset Management Company (MG AMCO)" in early July, the organization plans to more comprehensively and systematically resolve non-performing loans in the second half of the year, accelerating its efforts to manage financial soundness.

Currently, the Ministry of the Interior and Safety is conducting a special inspection (from July to September) of approximately 100 Saemaul Geumgo branches nationwide, and Saemaul Geumgo is making active efforts to strengthen internal controls and eradicate financial accidents. In the event that a significant financial accident is detected during this process, the organization plans to take strict post-incident measures, including the application of a "one-strike-out" policy, to restore customer trust.

Meanwhile, Saemaul Geumgo also plans to strengthen its core role to ensure that its functions as a community financial institution for low-income individuals are not weakened due to its focus on soundness management. The organization will gradually expand the scale of policy loans provided to small business owners and individuals with mid-to-low credit ratings, and will continue to enhance its inclusive finance functions and seek ways to contribute to local communities, thereby reinforcing its identity as a community-centered financial institution.

Kim In, President of the National Credit Union Federation of Korea, said, "Although we expect a challenging business environment to continue for the next one to two years due to the delayed recovery of the real estate market and the restructuring of PF project sites, we are simultaneously pursuing structural reforms and strengthening soundness to overcome the crisis under the guidance and cooperation of the Ministry of the Interior and Safety." He added, "We will continue to reduce losses and implement unprecedented measures to achieve prompt normalization of operations."