Savings Banks Post Record Profit in First Half, But Corporate Loan Delinquency Rises

South Korean savings banks achieved a combined net profit of 765.8 billion won in the first half of the year, marking a significant increase from the previous year and nearing their record half-year earnings. This performance was bolstered by a substantial rise in securities investment profits and a considerable decrease in bad debt expenses due to efforts to reduce non-performing loans.

The total assets of the 79 savings banks grew to 120.6 trillion won by the end of June, an increase of 2.6 trillion won from the end of last year. This growth was partly attributed to an expanded supply of mid-interest rate loans, with the volume of such loans increasing by 600 billion won to 18.2 trillion won. Deposits also saw an increase, reaching 100.4 trillion won.

Despite the overall positive financial results, concerns are rising over the increasing delinquency rate for corporate loans, which climbed to 8.38% from 8.00% at the end of 2025. This contrasts with a slight decrease in the delinquency rate for household loans. The overall delinquency rate for savings banks stood at 6.26%, a marginal increase from 6.04% at the end of last year.

Similarly, mutual financial institutions, including credit unions and agricultural cooperatives, reported a net profit of 714.1 billion won in the first half. Their interest income grew substantially, but they also experienced a rise in delinquency rates, with corporate loan delinquencies jumping significantly to 8.03%. Financial authorities noted that while loan delinquencies are increasing, particularly for corporate clients, the capital adequacy ratios of these institutions remain at a sound level.

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The delinquency rate for both savings banks and mutual financial institutions has risen, centered on corporate loans, compared to the end of last year. However, their loss-absorbing capacity, such as capital ratios, remains at a sound level.