Savings banks swing to black in July-December period

SEOUL, Jan. 29 (Yonhap) -- South Korea's savings banks swung to the black in the first half of fiscal 2014 from a year earlier as they set aside less loan-loss reserves and employed strict loan criteria, data showed Thursday.

The combined net profit of 80 savings banks operating in the country came to 193.8 billion won (US$178.7 million) in the July-December period, a turnaround from a net loss of 423.5 billion won the previous year, according to the data compiled by the Financial Supervisory Service (FSS).

Compared with six months earlier, their half-yearly net income also swung to a profit from a net loss of 82.4 billion won for the January-June period. The savings banks close their books in June.

Local savings banks had suffered huge deficits for years as a huge chunk of loans extended to finance real estate development projects turned sour.

When the housing bubble burst in 2011 and 2012, many of the savings banks ended up shutting down or were taken over by local banks and foreign funds.

The sharp turnaround came as they set aside less bad loan reserves as part of a successful restructuring program to increase their financial health.

A total of 333.2 billion won was set aside against bad loans during the cited period, sharply down from 781.4 billion won a year ago, according to the data.

On the back of massive write-offs of bad loans and heightened risk management, the lenders' loan delinquency rate also dropped to 14.8 percent at the end of December from 17.6 percent six months earlier, the FSS said.

The capital adequacy ratio, a key gauge of financial soundness, stood at 14.08 percent as of end-December, down 0.2 percentage point from end-June.

Their combined assets totaled 37.8 trillion won as of the end of December, up 1 trillion won, or 2.8 percent, from six months earlier, according to the data.

brk@yna.co.kr
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