Suhyup Bank

We also expect Suhyup to maintain a very strong link with the government. This is based on the government's record of providing support such as capital injection in 2001 or subsidies when NFFC was reorganized in 2016. The stable outlook on Suhyup reflects our view that the bank will maintain adequate capitalization supported by moderate business growth over the next 18-24 months. The bank's adequate underwriting standards and risk management will likely prevent a material deterioration in asset quality. The outlook also reflects our view that Suhyup will have a very high likelihood of receiving extraordinary support from the Korean government, if needed, over the period. We could downgrade Suhyup if the bank's asset quality significantly weakens along with a

...We believe Suhyup Bank's adequate risk management can help it to contain some asset quality pressure. The bank's loans to small and midsize enterprises (SMEs) are highly collateralized. Moreover, Suhyup's reasonably tight underwriting standards, such as low loan-to-value (LTV) ratio or debt servicing-to-income ratio (DSR) requirements, will likely underpin sound asset quality for its household loans. The bank's nonperforming asset (NPA) ratio was about 0.8% at end-June 2024, broadly in line with the domestic banks' average, despite a rise from 0.5% a year ago. Suhyup's moderate loan growth will likely support its adequate capitalization over the next two years. We anticipate the bank will focus on risk control rather than on growth amid still-high domestic interest rates and a sluggish nationwide property market despite some recovery in Seoul and its surrounding areas. While Suhyup could pursue acquisitions in the nonbank business in the coming few years, the size will likely be small and...

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