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By Anna J. Park
Major financial groups maintain a relatively stable risk exposure to real estate project financing, while regional financial groups tend to have a larger exposure compared to their loan provision sizes, data showed.
According to local financial groups' data compiled by Meritz Securities, four major financial groups ― Shinhan, KB, Hana and Woori ― hold an average exposure to real estate project financing of 1.7 percent compared to their aggregated amount of loans, as of the end of the third quarter this year.
Shinhan Financial Group turned out to have the largest percentage of exposure, as it holds 8.9 trillion won ($6.25 billion), or 2.3 percent of exposure to real estate project financing out of its total amount of loans. Shinhan Bank has 3 trillion won worth, followed by Shinhan Securities with 1.2 trillion won and Shinhan Capital with 3 trillion won.
KB Financial Group holds 2.2 percent of exposure to real estate project financing out of its entire amount of loans, 0.1 of a percentage point lower compared to Shinhan Financial Group. Yet, the total amount is larger than Shinhan's 9.5 trillion won. KB Kookmin Bank has 3 trillion won worth of real estate project financing, followed by KB Securities' 2 trillion won and KB Insurance's 1 trillion won.
Hana Financial Group also holds about 2.2 percent of real estate project financing exposure, or 6.2 trillion won in actual amount. Hana Bank has about 3 trillion won worth, followed by Hana Securities' 1.7 trillion won, Hana Capital's 1 trillion won and Hana Savings Bank's nearly 1 trillion won.
Woori Financial Group holds the least percentage of exposure to real estate project financing, which stands at 2.5 trillion won, or 0.7 percent out of its total amount of loan provisions. While the fact that Woori Financial does not own a securities company contributed to its lowest percentage, Woori Bank also holds the lowest amount of exposure to real estate project financing of around 1 trillion won, which is only a third of what other major financial groups' banks hold.
Market watchers say that growing market concerns over risk factors stemming from real estate projects have made financial groups put more emphasis on maintaining capital soundness.
"As major financial groups' exposure to real estate project financing remains at around 1 to 2 percent of their total loan amounts, it suggests they've had a low possibility of insolvency in their real estate project financing so far. However, what concerns the market is a growing risk of real estate project financing in the future, so continual and thorough monitoring is required," said Kim Do-ha, analyst at Hanwha Investment & Securities.
While major financial groups remain in a relatively sound level when it comes to real estate project financing, regional financial groups have higher exposures to it, with JB Financial Group recording the highest exposure of 11.6 percent out of its loan size. DGB Financial Group and BNK Financial followed JB Financial, as their exposures stood at 7.2 percent and 6.9 percent, respectively, as of the end of the third quarter.
The higher-risk exposures to real estate project financing borne by the regional financial groups require them to raise their risk management capabilities and capital soundness.
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