2 The financial sector is paying attention to see if it can solve the delinquency rate by using refinancing loans./Newsis
As of the 31st, as the refinancing loan infrastructure participated by 53 financial companies and 23 loan comparison platform companies began service, savings banks and other financial institutions are worried about the departure of customers. Some lenders are expected to leave and revenues will fall, but conversely, delinquency rates are expected to fall.
According to the financial industry on the 29th, the launch of the exchange loan platform has entered the countdown. Commercial banks as well as savings banks and credit card companies participate to introduce the lowest interest rate products suitable for credit rating. 2 This is to encourage low credit borrowers to pay relatively low interest rates when there is a change in their credit score or their ability to repay when taking out a financial loan.
When the refinancing loan platform idea appeared, there were voices of opposition in the second financial sector. This is because it has been predicted that medium credit borrowers will leave to transfer to low interest loans. When Tossbank announced the launch of a refinancing loan platform last year, the card industry voiced its opposition, raising concerns about taking borrowers for medium credit loans using data from each company.
However, the atmosphere in the second financial sector seems to have changed recently. This is because delinquency rates have risen across all sectors, including insurance companies, credit card companies, and savings banks. If more borrowers repay their loans after the launch of the refinancing loan platform, the delinquency rate can be reduced. That the exchange loan platform can act as a ‘trigger’ to ensure robustness.
The delinquency rate has a direct impact on net profit. This is because if the delinquency rate for each bereavement rises, more loan loss provisions must be built up. As loan loss provision has been identified as the cause of the decline in profitability in the first quarter of this year, it is necessary to seek a rebound in the second half by resolving the delinquency rate.
Furthermore, the delinquency rate of the second financial sector was treated as a ‘time bomb’ starting in the fourth quarter of last year. Attention was drawn to the fact that care is needed due to the nature of the financial sector, where a series of crises occurs when one axis collapses.
In the case of credit card companies, the delinquency rate has risen mainly on card loans and revolving (a contract to carry forward certain payment amounts). According to data provided by Democratic Party lawmaker Yang Kyung-sook from the Financial Supervision Service, the card loan balance at the end of the first quarter was 34.121 trillion won. Last month, the cumulative revolving balance of the seven full-time card companies (Shinhan, Samsung, KB Kookmin, Lotte, Hyundai, Woori, and Hana Card) won 7,172.9 billion.
The delinquency rate has reached its highest level in the last three years. Lotte (1.49%) Shinhan (1.37%) Woori Card (1.35%) KB Kookmin (1.19%) Hana (1.14%) Samsung Card (1.10%) in order. Considering that some card companies recorded less than 1% in the same period last year, it is indicated that vigilance is necessary.
In the case of insurance companies, savings banks, and mutual finance sectors, they were unable to avoid insolvency in project financing (PF) along with the cold wave in real estate. The delinquency rate and non-performing loans from savings banks exceeded 5%. In the savings bank sector, he explained that the capital adequacy ratio is maintained at 13.6%, which is higher than the 11% set by the authorities. Subsequently, the insurance industry was the only one among the 2nd financial sector to increase its PF loan balance by about 200 billion won.
An official from the 2nd financial sector said, “The delinquency rate of the 2nd financial sector is treated as a ‘time bomb’, so the departure of some borrowers may lead to damage, but it is positive to ensure soundness.”
