Korea Ratings Upgrades Daishin F&I Credit Rating to 'A+'

Favorable Market Environment Created
Asset Quality Risks Also Alleviated

Korea Ratings upgraded the credit rating of Daishin F&I from 'A' to 'A+'.

On April 9, Korea Ratings announced that, through its regular review conducted the previous day, it raised the outlook for Daishin F&I’s unsecured bond rating from 'A (Positive)' to 'A+ (Stable)' and upgraded the company's commercial paper and short-term bond credit ratings from 'A2' to 'A2+'.

First, the significant expansion of the non-performing loan (NPL) investment market among banks has created a favorable market environment, which was positively evaluated. Korea Ratings stated, "With the increase in the scale of NPL sales by banks, Daishin F&I’s new NPL investments have grown substantially,” and added, “Through capital increases by Daishin Financial Group and the recovery of high-risk exposures, the company has strengthened its capacity to invest in NPLs and is regaining its previous market position.”

The reduction in high-risk exposures and the shift in asset composition toward NPL investments have also alleviated asset quality risks. The proportion of NPL investment assets increased from 19% at the end of 2022 to 57% as of September last year. Meanwhile, the proportion of alternative investments decreased from 20% to 7%, and real estate development and investment dropped from 33% to 17%. Korea Ratings commented, "Considering Daishin F&I's asset management plan to maintain the current level of NPL investment balance and recover high-risk exposures, the possibility of a significant increase in asset quality risk is considered low."

Strong profitability also contributed to the rating upgrade. Korea Ratings noted, "In 2021 and 2022, Daishin F&I recorded large one-off profits through the sale of Nine One Hannam units. In addition, the recognition and reversal of provisions related to taxation on Nine One Hannam resulted in significant one-off non-operating gains in 2022 and 2024. The expansion of NPL investments and the alleviation of potential credit loss burdens are expected to have a positive effect on profitability."

Previously, NICE Investors Service also upgraded Daishin F&I's long-term credit rating from 'A (Positive)' to 'A+ (Stable)' and its short-term credit rating from 'A2' to 'A2+' on April 2.

This content was produced with the assistance of AI translation services.