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Financial Supervisory Service www.fss.or.kr
Press Release February 6, 2009
Banks’ Real Estate PF Loans as of end-December 2008 Trends in Banks’ PF Loans Banks’ total real estate PF loans at end-2008 was KRW52.5 trillion, an increase of KRW10.7 trillion or 25.5% from end-2007 figure of KRW41.8 trillion. Growth in loans slowed in 2H of 2008 from KRW6.1 trillion (14.5%) in 1H 2008 to KRW4.6 trillion (9.6%) in 2H. The delinquency ratio increased by 0.59 percentage points from 0.48 percentage points at end-2007 to 1.07%, but was off 0.20 percentage points from end-September with banks strengthening their delinquency accounts for yearend settlement. The downturn in the real estate market during the 2H was cited for the delinquency ratio rise on yearly basis along with the deterioration in construction companies’ liquidity. Domestic Banks’ Real Estate PF Loans (End of Period) 2007 Mar. 2008 Total PF loans 41.8 44.0 Delinquency ratio 0.48% 0.86% % of total loans 4.2% 4.2% Note 1: Figures are direct bank loans Note 2: end-Dec. 2008 figures are preliminary
Jun. 2008 47.9 0.68% 4.4%
Sept. 2008 49.7 1.27% 4.3%
(In KRW, trillion) Dec. 2008p 52.5 1.07% 4.5%
Of the KRW52.5 trillion in total bank real estate PF loans, KRW4.8 trillion or 9.1% represented PF loans under the name of the 12 constructors listed for restructuring on January 20 last month. Real estate PF loans made up 4.5% of all bank loans outstanding, but the credit risk outlook on banks’ PF loans remains weak with the worsening conditions in the construction industry at home and abroad. Future Actions By being consistently abreast of conditions affecting banks’ PF loans, necessary actions could be taken upon identifying early signs of distress. To offset any factor that distressed PF loans might have on bank soundness, asset classification based on exhaustive feasibility analysis will be encouraged together with adequate provisioning for losses. ### 1/2
Financial Supervisory Service www.fss.or.kr
Contact Persons: Yang Hyun Keun Deputy Director Bank Service Department 1 Financial Supervisory Service
Lee Bum-Yoal Associate Director International Cooperation Department Financial Supervisory Service