South Korea's largest regional Nonghyup cooperatives all expanded property-backed lending in the first half of this year. The loans grew by nearly 1.5 trillion won in six months while delinquency rates rose, adding pressure on asset quality.
An analysis by Seoul Economic Daily of first-half disclosures from the 10 largest regional Nonghyup cooperatives by assets as of the end of last year showed their combined property-backed loan balance rose to 26.75 trillion won ($19.7 billion) at the end of June from 25.26 trillion won at the end of last year, an increase of 1.49 trillion won, or 5.9%.
Most of the 10 largest cooperatives are in the Seoul metropolitan area, including Seoul, Incheon and Suwon. Nine of them posted higher property-backed loan balances, with Seoul Southwest Nonghyup the only exception. Yeongdeungpo Nonghyup, the second-largest by assets, recorded the biggest gain, with its property-backed loans rising to 4.32 trillion won at the end of June from 3.84 trillion won at the end of last year, an increase of 483.8 billion won, or 12.6%.
Lending at the biggest cooperatives was also heavily concentrated in property collateral. Property-backed loans accounted for 94.8% of total lending at Seoul Livestock Nonghyup, the largest by assets, and 99.4% at Yeongdeungpo Nonghyup at the end of June. The two cooperatives hold assets of 5.87 trillion won and 5.38 trillion won, respectively.
Unsecured lending, by contrast, declined. The 10 cooperatives' combined unsecured loan balance fell to 694.6 billion won at the end of June from 810.3 billion won at the end of last year, a drop of 115.7 billion won, or 14.3%.
Asset quality indicators worsened. The simple average delinquency rate at the 10 cooperatives rose 0.58 percentage points to 3.37% at the end of June from 2.79% at the end of last year, moving above the 3% mark.
