 |
(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Minyoung] In the second quarter (April to June), half of the 30 savings banks evaluated by the three major domestic credit rating agencies in South Korea had their credit ratings downgraded or their outlooks adjusted to negative.
According to the credit ratings of savings banks in the second quarter by the three major domestic credit rating agencies (NICE Credit Rating, Korea Ratings Corporation, and Korea Investors Service), five savings banks (including duplicates) had their credit ratings downgraded. Specifically, on June 28th, NICE Credit Rating downgraded the credit rating of OSB Savings Bank from 'BBB/Negative' to 'BBB-/Stable'. In April, this credit rating agency had also downgraded the credit rating of Pepper Savings Bank from 'BBB/Negative' to 'BBB-/Negative'. Korea Ratings Corporation downgraded the credit ratings of Baro Savings Bank (April) and Welcome Savings Bank and Kiwoom Savings Bank (June) in the second quarter. Although Korea Investors Service did not adjust any ratings in the second quarter, it downgraded the rating of JT Chinae Savings Bank at the end of March. Additionally, 10 savings banks had their outlooks downgraded by the three major credit rating agencies in the second quarter, even if their ratings were not adjusted.
Credit rating agencies cited the significant increase in non-performing real estate PF loans as a reason for the downgrades in credit ratings and outlooks of savings banks.
Additional profitability deterioration is also expected due to increased provisioning. In May, financial authorities established a new business site evaluation criterion divided into four stages (Good, Average, Caution, Concern) to ensure the soft landing of PF projects.
Recently, to manage their soundness, savings banks created a second fund worth 500 billion KRW to clean up bad debts.
Alphabiz Kim Minyoung (kimmy@alphabiz.co.kr)
