South Korea’s savings banking sector rebounded into profitability last year, driven by reduced loan-loss reserves, according to recently released financial data.
The aggregate net profit of the 79 savings banks operating across the nation amounted to 417 billion won ($278 million) in the past year. This marks a significant turnaround from the 423 billion won loss experienced the previous year, as reported by their trade association.
The data highlights a substantial decrease of 455 billion won in loan-loss reserves compared to the year before, contributing to the improved financial performance.
The asset soundness of these institutions also saw improvement, with the delinquency rate decreasing to 6.04 percent at the end of December, a notable decline from 8.52 percent a year prior.
The corporate loan delinquency rate experienced a sharp decrease of 4.81 percentage points year-on-year, settling at 8 percent. Conversely, the household loan delinquency rate saw a slight increase of 0.14 percentage point to 4.67 percent during the same period.
The average capital adequacy ratio for savings banks stood at a healthy 15.85 percent at the close of December, as indicated by the data.
Total assets for the savings banking industry reached 118 trillion won last year, representing a decrease of 2.9 trillion won compared to the previous year.
Notably, the savings banks had faced net losses for two consecutive years, recording a combined net loss of 397 billion won in 2024, following a loss of 576 billion won the year before.
