Korean financiers post 2 trillion won in irrecoverable losses in 2023

Korean financiers report 2 trillion won worth of irrecoverable loan receivables in 2023. [YONHAP]

Loan receivables that Korea’s four major financiers have given up on retrieving were found to amount to 2 trillion won ($1.5 billion) as of the end of last year.

The outstanding amount of estimated losses incurred by Shinhan, KB, Hana and Woori in 2023 came to 1.97 trillion won, a record total representing a 48.8 percent increase from a year earlier, according to Korea's financial industry.

By financier, KB Financial Group’s estimated loss expanded the most by 84.9 percent to 392.6 billion won as of the end of last year from 212.3 billion won the year before.

Shinhan Financial Group’s estimated loss increased by 30.5 percent from 575.9 billion won to 751.4 billion won during the cited period, the highest estimated loss by outstanding amount.

Hana’s figure came to 343 billion won and Woori 479 billion won.

Asset soundness for financial companies can be categorized into five tiers, with “estimated loss” in the lowest.

“Estimated loss” for banks applies to loans that are deemed impossible to retrieve as the borrower’s ability to repay is severely compromised due to reasons such as business bankruptcy.

The slow economy and prolonged high interest rates that led to an increase in the default rate are regarded as the reason behind the snowballing estimated loss for banks.

“A deterioration in asset quality derives from borrowers vulnerable to an economic downturn,” KB Financial said.

Shinhan Financial said estimated losses for card companies went up due to pre-debt settlement by the Credit Counseling & Recovery Service.

Hana Financial explained economic uncertainty in and outside of Korea led to a gain in the insolvency of private and business loans as well as real estate development projects.

Woori Financial attributed the estimated loss hike to overdue loans from real estate private funds, card companies and credit companies as well as the recent workout of Taeyoung E&C.

BY HAN YOUNG-HYE [jin.eunsoo@joongang.co.kr]