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KDB swings to loss on bad loans to shipbuilding, shipping firms

All News 16:21 April 01, 2016

SEOUL, April 1 (Yonhap) -- State-run Korea Development Bank (KDB) posted its biggest loss in 17 years in 2015, as much of its loans to domestic shipbuilders and shipping companies turned into bad debts, the policy bank said Friday.

In a report on its website, the KDB said it swung to a net loss of 1.895 trillion won (US$1.6 billion) in 2015 from a net profit of 183.5 billion won a year earlier. The loss marked the worst performance since it recorded a loss of 4.889 trillion won in 1998 when the Asian financial crisis occurred.

"The shipbuilding and shipping industries have only deteriorated in past years. We suffered sharp declines in investment gains from those stocks, while setting aside massive loan-loss provisions in case of their insolvency," a KDB spokesman said.

The non-performing loans (NPLs) held by the KDB more than doubled to 7.327 trillion won last year from 3.078 trillion won the previous year. The ratio of NPLs to total loans jumped to 5.68 percent from 2.49 percent during the same period, the report said.

The KDB is the main creditor bank of Daewoo Shipbuilding & Marine Engineering Co. and Hyundai Merchant Marine Co., both still struggling with oversupply and low demand since the 2008 financial crisis.

Calling the net loss a "temporary and structural loss" that takes place due to changes in industry cycles, the state bank said it will continue to provide financial support to the "backbone" industries such as shipbuilding and shipping to bring them back on track through restructuring.


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