Saemaul Geumgo Posts 3.6 Trillion Won in Net Losses Over 3.5 Years... "Comprehensive Measures Needed"

Rep. Song Okju's Office: "Key Management Indicators of Mutual Finance Institutions"
292 Saemaul Geumgo Units Subject to Prompt Corrective Action

Saemaul Geumgo’s cumulative net losses from 2024 through the first half of this year exceeded 3.6 trillion won, while its accumulated deficit approached 2.3 trillion won, indicating deteriorating asset quality. Its financial soundness has yet to recover since it faced a crisis in 2023 over real estate project financing (PF).

According to National Assembly audit data on key management indicators submitted by five mutual finance institutions—NongHyup, Suhyup, forestry cooperatives, Saemaul Geumgo and credit unions—at the request of Rep. Song Okju of the Democratic Party of Korea on Oct. 23, Saemaul Geumgo’s accumulated deficit stood at 2.277 trillion won as of June this year.

Saemaul Geumgo recorded a net profit of 1.5864 trillion won in 2022 and 86 billion won in 2023, before turning to a net loss of 1.7423 trillion won in 2024. It posted a net loss of 1.2706 trillion won last year and 676.8 billion won in the first half of this year. The lawmaker’s office calculated that cumulative net losses from 2024 through the first half of this year totaled 3.6897 trillion won.

Its net interest margin (NIM), a measure of profitability, plunged from 2.12% to 1.00% in June this year, the lowest level among the five institutions. Its return on assets (ROA) also fell from 0.59% in 2022 to -0.23% in the first half of this year. Of the 1,239 credit unions, 875, or 70.6%, had an ROA below 0.3%.

Although Saemaul Geumgo sold about 26.6 trillion won in nonperforming loans from 2023 through June this year, its overall delinquency rate rose by 1.27 percentage points over the same period, from 5.07% to 6.34%.

As of June this year, the delinquency rate on corporate loans was 10.17%, compared with 1.90% for household loans, indicating that bad corporate loans are weighing on the institution’s financial soundness.

Accordingly, the number of credit unions subject to prompt corrective action—a measure imposed by the Financial Services Commission when their management falls below required standards—increased from 54 in 2022 to 292 in June this year. The data showed that 58 mergers had taken place, reducing the number of credit unions from 1,294 to 1,239.

Both member contributions and deposits also declined. In 2022, they stood at 11.4846 trillion won and 251.4209 trillion won, respectively, falling to 9.7242 trillion won and 243.2478 trillion won, respectively, as of June this year. However, the liquidity ratio—a measure of how readily short-term liabilities due within a year can be repaid with easily liquidated short-term assets—rose by 95.79 percentage points over the same period, from 93.24% to 189.03%.

Rep. Song urged Saemaul Geumgo’s central organization, the Ministry of the Interior and Safety, which oversees it, and the Financial Services Commission to “immediately draw up a comprehensive and robust supervisory plan to protect depositors, alongside full disclosure of information on breaches of the single-borrower lending limit and the status of delinquent loans.”

Yonhap News Agency

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