The Korea Herald


KEXIM logs massive H1 loss on bad debts to shipbuilders

By 박한나

Published : Sept. 13, 2016 - 15:49

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[THE INVESTOR] The Export-Import Bank of Korea has posted a net loss of 937.9 billion won (US$840.71 million) for the first half of the year as its bad debt provisions surged on heavy exposure to shipbuilders which are undergoing industry-wide restructuring, the state-run policy bank said on Sept. 13.

The amount of provisions that the export credit agency put aside for the first six months stood at 1.79 trillion won, more than quintuple of 330 billion won in the same period last year.

Over 75 percent of the provisions stemmed from loans extended to financially trouble local ship yards including Daewoo Shipbuilding & Marine Engineering, STX Offshore & Shipbuilding and Sungdong Shipbuilding & Marine Engineering. 

In August, the agency categorized Daewoo Shipbuilding’s debts as “precautionary”, from “normal.”

Reclassifying the loans to precautionary status meant it needed to allocate 7 percent to 19 percent of its loans to Daewoo as provision. It is much higher than 0.85 percent for normal loans.

The over 1.7 trillion provision was also on account of STX Offshore & Shipbuilding which was put under court receivership in May. This means the KEXIM has to classify the entire loans extended to the shipbuilder as estimated loss.

Stung by the first half loss, its BIS capital adequacy ratio decreased to 9.69 percent as of the end of the second quarter, down 0.2 percent from the earlier quarter.

By Park Han-na (