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Despite the large-scale disposal of non-performing loans by local banks last year, the soundness index still has not improved. In response, local banks are expanding household loans this year and are still working on foreigners-specific strategies that are evaluated as blue ocean in the banking sector.

According to the banking sector on the 19th, the bad debt expense of local financial holdings (BNK,JB, and DGB Financial) reached about 1.635 trillion won last year, up 3.61% from the previous year. Bad debt expense is the amount that a bank or financial institution treats as an expense in its accounting books when it is expected that it will not be able to collect loans or other bonds.

This is attributed to the continued increase in delinquency rates of major borrowers, including construction companies, who received loans from local banks due to the economic downturn in local regions.

Last year, the "fixed sub-loan ratio," which represents the level of credit holdings that had problems with collection, rose to all but Jeonbuk among the five major banks in Busan, Gyeongnam, Jeonbuk, Gwangju, and iM (Daegu). Fixed loans are non-performing loans (NPLs) that combine fixed, collection questions, and estimated loss loans, and it is difficult to recover the borrowed money because interest cannot be recovered. The higher this ratio, the lower the bank's soundness.

The ratio of fixed loans by each company was 0.72% and 0.45% for Busan Bank and Gyeongnam Bank, respectively, up 0.3%p and 0.07%p from the previous year. During the same period, Gwangju Bank's fixed loan ratio increased by 0.04%p, and Jeonbuk Bank decreased by 0.01%p. iM Bank expanded 0.08%p to 0.73%.

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Accordingly, local banks are seeking a way out by expanding household loans based on support policies and fostering high value-added business groups.

The financial authorities plan to give local banks some leeway in lending capacity this year to manage the ever-worsening local economy. In particular, if commercial and local banks expand their handling of local mortgage loans in consideration of local real estate difficulties, incentives will be given, including additional 50% of the handling expansion in the annual household loan management goal.

In addition, local banks are focusing their capabilities on developing specialized services for foreign customers. Foreign customers often find it difficult to access existing financial services, but alternatives have not yet been diversified, so customized financial services for them are considered to have high potential value.

Starting this month, Jeonbuk Bank will operate the Bravo Korea Moving Lounge No. 1 for foreign customers for the first time in Korea. It aims to improve the accessibility and convenience of customers who have difficulty visiting branches or using bank apps. It also provides foreign customers with visiting and accompanying services to various institutions.

Gwangju Bank opened the 'Foreign Financial Center' for the first time in the Gwangju and Jeonnam financial sectors. Through this, real-time interpretation and translation services supporting 38 languages were provided, foreign employees from four countries (Vietnam, Indonesia, Nepal, and Mongolia) were placed at the window, and foreign bank accounts, cards, and loan products were introduced.

BNK Gyeongnam Bank Moving Bank (mobile branch) recently visited a local university and provided various financial services to foreign students. Through this, financial affairs such as opening a deposit and withdrawal account, issuing a debit card, and subscribing to electronic financial services were supported.

A local bank official said, "Since large corporations have open business relations with commercial banks, local banks are greatly affected by local small and medium-sized companies and construction companies, and their bad debt ratio is on the rise."