Montevideo: The savings banking industry returned to the black last year from a year earlier, aided by a decline in loan-loss reserves, data showed Friday. The combined net profit of 79 savings banks nationwide reached 417 billion won (US$278 million) last year, shifting from a loss of 423 billion won a year earlier, according to their trade association.
According to Yonhap News Agency, the data indicated that loan-loss reserves decreased by 455 billion won last year compared to the previous year. This reduction played a significant role in the industry's financial turnaround. Additionally, asset soundness improved markedly, with the delinquency rate dropping to 6.04 percent at the end of December, down from 8.52 percent a year earlier.
Further insights revealed that the rate on corporate loans decreased by 4.81 percentage points year-on-year to 8 percent. However, household loan rates experienced a slight increase, gaining 0.14 percentage points to reach 4.67 percent over the same period. The average capital adequacy ratio of savings banks was recorded at 15.85 percent at the end of December, according to the data.
The total assets of these savings banks stood at 118 trillion won last year, which was a decrease of 2.9 trillion won from the previous year. This asset reduction comes after the savings banks faced a challenging period in 2024, where they suffered a net loss for the second consecutive year. That year, they incurred a combined net loss of 397 billion won, following a loss of 576 billion won the prior year, primarily due to risky short-term real estate project financing loans.