...The commercial banks' loan quality has improved in recent years as they shifted their loan mixes towards household sectors while shedding exposures to ailing industrial sectors. The weaker loan qualities of KDB and KEXIM relative to commercial bank peers reflect their sizeable exposures to weak shipbuilding and shipping sectors, in part, due to their policy roles in restructuring these sectors. The impaired loan coverage ratios among the commercial banks have improved as they cleaned up loans from weak sectors. Fitch estimates most banks' impaired loan coverage ratios will rise by 10pp- 20pp when IFRS 9 is implemented in 2018. The commercial banks are likely to continue shifting their loan mixes towards retail customers and property leasing given those sectors' relatively lower risk-weights, robust loan demand and sound performance. Hana and Woori have been proactive in reducing their large corporate exposures in recent years. Fitch expects the system's loan growth to remain broadly in...
