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| KB Financial Group Chairman Yoon Jong-kyoo, left, talks with Financial Supervisory Service Governor Lee Bok-hyun during a meeting between leaders of financial authorities and Korea's major financial holding firms in Seoul, Wednesday. Yonhap |
By Lee Min-hyung
The top five financial holding firms here will focus on monitoring potential business risks in the second half, as part of a preemptive move to deal with rising delinquency rates.
According to data from the Financial Supervisory Service, the average delinquency rate of commercial banks here came in at 0.37 percent as of the end of April, up 0.04 percentage points from a month earlier. This is the highest since August 2020.
This pushes financial firms to evade risks through aggressive business expansion, even at a time when their earnings are forecast to have reached a record high in the first half. Market consensus suggests that the five leading financial firms ― KB, Shinhan, Hana, NH and Woori ― are estimated to have chalked up a combined net profit of more than 11 trillion won ($8.47 billion) between January and June.
Nevertheless, they will place more emphasis on maintaining their financial soundness, rather than seeking additional investment for higher returns.
Other data from the financial industry showed that the balance of household loans is on track for a rise again despite steep rate hikes. The five major lenders' balance of household loans reached 678.24 trillion won as of the end of June, up more than 600 billion won from a month earlier. The figure rose in May for the first time in more than 17 months and reported growth for two consecutive months.
Amid unceasing financial scandals here and abroad ― triggered by the rapid rate hikes ― financial authorities are also pressing banks and financial firms to build their reserves against bad debts and tighten their risk management capabilities.
The Financial Services Commission said Wednesday it would strengthen monitoring of all the processes of banks' stress tests and urged them to gather more capital when they do not meet a certain level of risk management capabilities.
"Tightening risk management will stand at the top of priorities for most banking groups in the latter half, as watchdogs escalate their vigilance against a possible recurrence of any recent financial scandals ― such as the sequential collapse of U.S. banks and growing woes on a possible bank run of a local community credit cooperative," a source from the financial industry said.
Despite the regulatory pressure, some financial groups such as Woori continue looking for opportunities for memoranda of understanding in the non-banking sector, after the group ceded its position as the nation's fourth largest financial holding firm to NH Financial Group in the first quarter.
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