KB Kookmin Bank nearly tripled its real estate project financing (PF) credit support this year, helping projects move forward. Industry observers say the move also serves to provide liquidity for expanding housing supply.
According to financial industry sources on the 26th, KB Kookmin Bank's new PF credit support (external credit enhancement and asset-backed securities purchase guarantees) in the first half of this year totaled 3.376 trillion won. That accounts for 40.6% of the total for the four major commercial banks, which stood at 8.3163 trillion won.
New PF credit support at the four major commercial banks rose 37.3% from 6.0568 trillion won in the same period a year earlier. KB Kookmin Bank led the increase, with a 163.6% jump year-on-year. Shinhan Bank fell 16.6% to 2.298 trillion won, while Hana Bank rose 5.8% to 1.6852 trillion won. Woori Bank climbed 123.6% to 957.1 billion won.
KB Kookmin Bank expanded its credit support for redevelopment projects in particular. In the first half, it provided asset-backed securities purchase guarantees worth hundreds of billions of won for large projects such as the Hannam District 2 redevelopment (802.5 billion won) and the Jangwi District 10 redevelopment (792.7 billion won). It also participated in transactions tied to major urban redevelopment projects, including the Garak Miryung Apartment reconstruction (97.5 billion won) and the Banpo-dong MV Apartment remodeling (99.1 billion won).
To manage its PF exposure, KB Kookmin Bank expanded securitization deals backed by guarantees from the Korea Housing & Urban Guarantee Corporation (HUG). HUG guarantees the loan principal and interest repayment obligations borne by redevelopment associations, lowering the credit risk of the underlying PF loans. Under this structure, KB Kookmin Bank supports liquidity by providing commitments to purchase any unsold portions if the issued asset-backed securities cannot be refinanced in the market.
KB Kookmin Bank continued support not only for redevelopment projects but also for general development projects. It provided asset-backed securities purchase guarantees for projects run by Daebang Construction (640 billion won), Upseong Development PFV (263.5 billion won) and Shinsegae Property (50 billion won), backing their funding efforts.
In the recent real estate market, a combination of shrinking PF, rising construction costs and tighter soundness management in the financial sector has weakened the foundation for housing supply. Through May this year, housing completions in Seoul totaled 13,111 units, down 41.6% from 22,440 units in the same period last year. Of the 183,055 housing units approved in Seoul from 2020 to 2022, only 91,490 units, or about half, proceeded to construction over the following three years. Because construction delays are likely to lead to a decline in future move-in supply, smooth PF funding is seen as a key task for restoring the supply ecosystem.
A financial industry official said, "If PF funding is blocked, redevelopment and development projects are delayed, which can ultimately lead to a decline in move-in supply and instability in the rental market."
A KB Kookmin Bank official said, "We are taking a strategy of using HUG guarantee certificates to respond to project sites' funding demand and secure price competitiveness," adding, "We plan to maintain our stance of expanding safe guaranteed assets."
