Troubled savings banks cut losses, but lose assets

Home > Business > Finance

print dictionary print

Troubled savings banks cut losses, but lose assets

Korea’s beleaguered savings banks managed to cut their combined losses by half last year, but their asset base has not improved, according to Financial Supervisory Service data released yesterday.

The country’s 91 savings banks recorded a net operating loss of 880.3 billion won ($784.2 million) in 2012 compared with 1.66 trillion won in 2011, but the banks’ assets totaled 43.9 trillion won in the first half of the year, down 13.2 percent year-on-year.

“The frozen real estate market, low interest rates and worsening business conditions have dragged down savings banks’ performance,” said an FSS official.

The loan delinquency rate rose to 21.7 percent during the January to June period, up 0.2 percentage point year-on-year. The delinquency rate for corporate loans was up 1 percentage point to 27 percent and household lending increased 0.2 percentage point to 11.5 percent.

Fifty savings banks recorded losses last year, and 49 savings banks were in the red in 2011.

“There were some signs that show slight improvement due to the government’s massive restructuring of ailing savings banks, such as a decrease in the banks’ net operating losses, but their asset soundness still hasn’t recovered,” said the FSS official. “We will continue monitoring savings banks’ performance.”

Last year, financial authorities suspended operations of Tomato 2 Savings Bank, Jinheung Savings Bank and five others because of poor liquidity.

Their capital adequacy ratio recommended by the Bank for International Settlements edged up 3.4 percentage point to 10.82 percent.

Meanwhile, financial authorities including the FSS and Financial Services Commission said they’re currently looking into helping these financial institutions to stay afloat by allowing them to sell bancassurance, or insurance policies.

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now