Photo by Cait Ellis via Unsplash.

Jeonbuk Bank profits to weaken from real estate lending woes

Asset quality and profitability will weaken through 2024, Moody’s said.

Jeonbuk Bank will come under pressure from its unsecured personal loan exposure but should be able to retail good capitalisation and stable funding over the next 12 to 18 months, Moody’s said.

Asset quality and profitability are expected to weaken through 2024. Loan delinquencies are likely to rise over the next 12-18 months, as a result of the South Korean bank’s sizable exposure to unsecured personal loans and real estate-related loans.

As of 31 March, about 27% of its Korean-won denominated loans were to real estate and construction companies, Moody’s noted. The credit risks for this sector have risen amidst the current high interest rate environment and softening real estate market.

On the other hand, its lending to near-prime borrowers should help the bank maintain net interest margins that are higher than that of peers. However, this also subjects the bank to earnings volatility in the event of an economic downturn.

Join Asian Banking & Finance community

ALSO READ: KEB Hana Bank’s profits stable in 2023, but NIM to decline

The bank will also experience narrower net interest margins due to stricter regulatory oversights on lending rates, and increased competition for deposits, as well as increased credit costs.

Deposits are well-diversified and granular, supported by its strong customer base in its home region of the Jeonbuk province, where it holds 24.8% deposit market share as of 31 May.

Liquidity, however, is weaker than its domestic and global peers, Moody’s noted.

Taking all these into account, Moody’s expects Jeonbuk Bank’s profitability to decline over the next 12-18 months. 

Follow the link for more news on

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

Lorem Ipsum Content on ABF
The text to display in the title bar of a visitor's web browser when they view this page. 
Lorem Ipsum
Contrary to popular belief, Lorem Ipsum is not simply random text.