Since the launch of the deferred payment program last February, total outstanding loans totaled 99.7 trillion won as of Friday, data from five major commercial banks showed. In addition, late payments due in installments totaled KRW 8.4 trillion and interest arrears totaled KRW 54.9 billion.
The five major banks are KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup, each of which began offering businesses a grace period at the “request” of the government last year.
The data comes amid growing fears that banks may face large-scale loan delinquencies and defaults with a third extension of the deadline as part of the deferral program.
The deadline has already been pushed back twice, first in September last year and then in March this year, due to lingering risks from the pandemic.
The fourth wave of coronavirus, which began earlier this month and increased the number of new cases to 1000 every day since July 7, has prompted talk of another six-month extension of the deadline as the deadline approaches at the end of September.
The Financial Services Commission, which made the policy, which was leaning towards completing the program in September, was reportedly considering extending another deadline amid a fourth wave. In March, the FSC said it would prepare a “soft landing” measure to help businesses cope with loan repayments.
Observers say that with banks and their holding companies reporting record performance figures in the first half of the year, it would be difficult to deny the government a request for a third time extension. With high fees from their brokerage firms pushed by investors flocking to stock and housing markets amid ultra-low interest rates, banking groups have been raking in money since last year.
Banking groups are now looking to pay rare interim dividends after they started posting record high net income for the first half of the year last week.
KB Financial Group’s net profit for the January-June period rose 44.6 percent year-over-year to 2.4 trillion won, while Woori Financial Group jumped 114.9 percent to 1.4 trillion won for the specified period. Hana Financial Group’s net income rose 30.2 percent to 1.7 trillion won, while NH Financial Group’s performance rose 19 percent to 1.2 trillion won over the same period.
Shinhan has yet to announce its performance numbers, but market watchers say its net profit for the specified period could surpass 2 trillion won for the first time.