Korea Ratings: "14 Real Estate Trust Companies Posted 468.9 Billion Won Net Loss Last Year"

Five Firms Including Kyobo, Mugunghwa and Woori Post Net Losses
"Recovery of Trust Companies' Profit-Generating Capacity Unlikely Anytime Soon"

Fourteen real estate trust companies recorded a combined net loss approaching 470 billion won last year. As weak order intake continues, there are projections that it will be difficult for trust companies to restore their profit-generating capacity in the near term.

According to Korea Ratings on the 20th, the combined net loss of the 14 real estate trust companies last year amounted to 468.9 billion won. By company, five firms - Kyobo, Mugunghwa, Woori, KB, and Korea - posted net losses.

For some trust companies, it is understood that the recognition of provisions for litigation related to failure to fulfill completion guarantees had a negative impact on their results. Koramco Asset Trust was the only trust company whose annual net profit exceeded 30 billion won. In the case of Koramco Asset Trust, this is analyzed to be due to its focus on the REITs business rather than the trust business.

Korea Ratings said, "As the decline in land trust fees continues, the lack of profit sources for trust companies is persisting," adding, "For trust companies that are engaged in traditional trust businesses, performance recovery is sluggish due to an unfavorable business environment."

Last year, land trust fees came to 472.4 billion won, down 27% from the previous year. While the land trust market has shrunk to the level seen before 2017, the number of trust companies has increased from 11 to 14, intensifying competition further.

Credit loss burdens also persisted in 2025, totaling 190.2 billion won. As of the end of last year, the balance of trust account loans was about 9 trillion won, up 16.5% from the end of the previous year.

Accordingly, there is a view that it will also be difficult for trust companies to restore their profit-generating capacity this year. Korea Ratings projected, "The business and financial outlook for the real estate trust business will remain unfavorable in 2026," and added, "Order intake remains weak, so there is a high possibility that the deterioration in profit-generating capacity will continue. The burden of managing financial soundness indicators is also expected to persist."

Specifically, although the funding burden from trust account loans for project completion has eased, Korea Ratings explained that if sales performance is poor, it is inevitable that there will be a burden in managing financial soundness due to delays in recovering already deployed trust account loans and an expansion of credit loss burdens. It also cited the ongoing litigation risk related to development trusts with completion guarantees as another factor weighing on financial stability.

As of the end of December last year, seven out of the 14 real estate trust companies - Kyobo, Korea Land Trust, Mugunghwa, Shinhan, KB, Korea, and Hanwha Investment & Securities - had debt ratios exceeding 100%. Excluding Daetoshin, six companies had debt ratios above 150%.