(MENAFN- Qatar News Agency) South Korea's savings banks turned to the black for the first time in seven years in fiscal 2014 from a year earlier as they set aside less bad loan reserves, the financial watchdog said Tuesday.
The combined net profit of 79 savings banks came to 500.8 billion won (US$432.6 million) from July last year to June this year, a turnaround from a net loss of 508.9 billion won in the previous year, according to the Financial Supervisory Service (FSS).
The banks close their books in June, according to South Korea's News Agency (Yonhap).
It is the first black figure since 2007, when 337 billion won in net income was tallied.
The turnaround is due to a sharp drop in the banks' bad loan reserves.
Local savings banks have undergone strict restructuring to clean up their balance sheets as they had suffered ballooning deficits for years as they had extended huge loans to project-financing companies amid a domestic real estate boom.
When the housing bubble burst in 2011 and 2012, many of them ended up shutting down or were taken over by larger banks and foreign funds.
The savings banks set aside 575 billion won for bad loans in the 12-month period, down 51.5 percent from 1.19 trillion won a year ago.
Their interest income also contributed to the strong bottom line, rising 9.3 percent on-year to 2.19 trillion won from 2 trillion won, according to the financial watchdog.
The loan delinquency rate of the lenders fell to 11.5 percent as of end-June from 17.6 percent a year ago on decreased household and corporate debts, the FSS said.
The capital adequacy ratio, a key gauge of financial soundness, stood at 14.57 percent at the end of June, up 0.29 percentage point from a year earlier.
Their combined assets totaled 40.2 trillion won as of the end of June, up by 3.5 trillion won from a year earlier.
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