FSS. Weekly Newsletter. September 7-11, Summary of Press Releases Weekly Market Briefing.

Transcription

1 FSS Weekly Newsletter September 7-11, 2015 Summary of Press Releases Weekly Market Briefing Financial Supervisory Service 38 Yeoui-Daero Youngdeungpo-Gu Seoul KOREA

2 Summary of Press Releases Real Estate Trust Companies Earnings, First Half 2015 (Issued September 7) The aggregate net income of the eleven real estate trust companies for the first half of 2015 came to KRW105.2 billion, up KRW31.7 billion from a year earlier. All eleven companies posted profit for the year, with Korea Real Estate Investment & Trust earning the highest of KRW35 billion. Operating revenues rose 15.3%, mostly affected by the increases in income from development-type land trusts, collateral trusts and proxy & agency business, as well as gains on disposition of available-forsale securities. On the other hand, interest on loans to trust accounts plummeted on the back of strong sales. Operating expenses declined 6.2% largely because development-type land trust projects proceeded well, contributing to decreases in bad debt expenses and interest expenses despite a KRW88 billion rise in selling and administrative expenses from increased personnel. Table 1. Real Estate Trust Companies Net Income, First Half 2015 (In billions of KRW) Year H1 H Operating revenues Operating expenses Operating income Net income The aggregate assets of the real estate trust companies totaled KRW1.756 trillion, up 3.6% from KRW1.696 trillion at the end of. The increased net income resulted in a KRW83.7 billion growth in equity capital, which reduced external funding needs, causing liabilities to fall 5.8% compared to six months ago. The net capital ratio (NCR) of the real estate trust companies averaged at 1,005.0%, up 32.1 percentage points from six months earlier. All of the companies reported NCRs well above the supervisory guideline of 150%. The ratio of real estate holdings classified as substandard or below (SBL) was 34.1%, down from 42.4% at the end of. Table 2. Financial Soundness of Real Estate Trust Companies, First Half 2015 (In billions of KRW, percent) H Assets 1, , , , ,756.3 Liabilities Shareholders equity , , , ,384.9 Net capital ratio ,005.0 SBL ratio Assets under management (AUM) by the eleven real estate trust companies totaled KRW131.9 trillion in the first half of 2015, up 5.3% from six months ago. Collateral trusts had the largest AUM, accounting for 62.2%, followed by administration-type land trusts and brokerage trusts. FSS Weekly Newsletter / SEPTEMBER 7-11,

3 Table 3. Real Estate Trust Companies AUM, First Half 2015 (In trillions of KRW) Year H1 H Land trusts Development Administration Management trusts Disposition trusts Collateral trusts Brokerage trusts Assets under management Table 4. Summary Income Statement, First Half 2015 (In billions of KRW) Year H1 H Operating revenues Fees/Commissions Development-type land trusts Administrative-type land trusts Management trusts Disposition trusts Collateral trusts Brokerage trusts Others Revenue from ancillary business Interest on loans to trust accounts Others Operating expenses Selling and administrative expenses Bad debt expenses Interest expenses Others Operating income Net income Insurance Companies Interest Margin and Net Investment Income, June 2015 (Issued September 9) Insurance companies interest rate margin, defined as difference between the rate of return on investment and the assumed interest rate for insurance liabilities, improved slightly in the period from July to June 2015 to -0.3 percentage point from -0.4 percentage point at the end of December. A 0.2 percentage-point drop in the assumed interest rate for insurance liabilities contributed to the improvement. Although the margin remained negative, operating assets surpassed insurance liabilities and helped to generate KRW2.1 trillion in net investment income and 0.32% investment income margin for the said period. Increases in gains from the disposition of investment securities of life insurers also contributed to a KRW600 billion jump in net investment income from December. FSS Weekly Newsletter / SEPTEMBER 7-11,

4 Table 1. Insurers Interest Spreads and Investment Income Return on investment Assumed interest rate * Interest rate margin (In percent, percentage point, trillions of KRW) Pretax Investment Net investment net investment income margin income income Life Insurers Dec June Dec Nonlife Insurers June Dec Total June Assumed interest rate for insurance liabilities FSS Introduces Measures to Advance Consumer Protection in Motor Vehicle Leasing (September 8) The Financial Supervisory Service announced on September 7 new plans to address improper business practices in motor vehicle leasing by credit-specialized finance companies. The plans are part of the 20 Reform Tasks that was introduced in May. The announcement comes as consumer complaints continue to increase with the leased car market growing significantly since the Specialized Credit Finance Business Act took effect in At the end of, the number of contracts reached 1.32 million, with a total value of KRW16.9 trillion. The plans include introduction of a pro-rated commission charge for early termination instead of the current fixed rate of 10% regardless of the remaining term on the lease. Under the new system, lessees who wish to terminate the lease early will be charged based on the remaining period. The charge on transferring leases to a third party will also change in a similar manner. In November, a standard contract stipulating important elements, such as lease fees and early termination charges, will be newly introduced. A booklet explaining key provisions of the consumer lease agreement is also to be issued to further advance consumer protection. To ensure that consumers are able to compare offers by competing lessors in their decision making process, information on top 20 leased cars will be made available on the Credit Finance Association web site starting this month. Expansion of the Search Service for Financial Records of Deceased Persons (September 10) From September 11, 2015, the FSS will include 146 funeral service providers, Korea Trade Insurance Corporation, Korea Federation of Credit Guarantee Foundations, and 15 other credit guarantee foundations to its search service for financial records of deceased persons. The expansion of information provided by the search service is expected to assist legal heirs in making decisions on whether to inherit financial assets and liabilities of deceased family members. Inclusion of the funeral service providers, in particular, was proposed by National Assembly Member Kim Sangmin, who serves on the National Policy Committee. Funeral service providers are required to deposit 50 percent of the advance payments they receive at banks or mutual aid associations. Funeral service providers that make deposits in banks 146 of them with approximately 803,000 members and advance payments of KRW378.9 billion were added to the search service, and the FSS is also consulting with the Fair Trade Commission to include funeral service providers that hold advance payments in mutual aid associations. There were 77 funeral service providers with more than three million members and KRW1.39 trillion in advance payments held in mutual association. FSS Weekly Newsletter / SEPTEMBER 7-11,

5 Weekly Market Briefing September 7-11, /7 9/8 9/9 9/10 9/11 Change Mon Tue Wed Thu Fri 9/7-11 Stock Indexes KOSPI 1, , , , , % KOSPI % KOSDAQ % Treasury and Corporate Bond Yields 3-Yr. Treasury Yr. Treasury Futures Yr. Corporate Bonds (AA-) Foreign Exchange Rates Won/Dollar 1, , , , , % Won/100 Yen 1, , % 1-month NDF 1, , , , , % Foreign Investors Net Stock and Bond Purchases (In billions of KRW) KOSPI * KOSDAQ * KRX-listed Bonds * Daily KOSPI and KOSDAQ Trading Volume (In billions of KRW) Stocks 6, , , , , ,290.9 (Foreign Investors) 2, , , , , Bonds 6, , , , , * Net cumulative amount for the week of September 7-11, 2015; FSS Weekly Newsletter / SEPTEMBER 7-11,

6 FSS Overseas Offices New York 14 th Floor, 780 Third Avenue New York, NY Tel: Fax: Washington, DC 1701 K Street, N.W., Suite 205 Washington, DC Tel: Fax: London 4 th Floor, Aldermary House, Queen Street London EC4N 1TX Tel: Fax: Frankfurt Feuerbach str Frankfurt am Main Tel: Fax: Tokyo Yurakucho Denki Building, South Kan 1051, 7-1 Yurakucho 1-Chome, Chiyoda-ku, Tokyo Tel: Fax: Beijing Room C704, Office Building, Kempinski Hotel Beijing, Lufthansa Center, No. 50, Liangmaqiao Road, Chaoyang District, Beijing Tel: Fax: Hong Kong Suite , Jardine House, 1 Connaught Place, Central, HONG KONG Tel: Fax: Hanoi #1203, 12th floor, Daeha Business Center, 360 Kim Ma, Ba Dinh, Hanoi Tel: Fax: FSS Weekly Newsletter / SEPTEMBER 7-11,

7 About This Publication The FSS Weekly Newsletter is freely available online as a PDF document at This publication, like other English publications the FSS issues for the benefit of the general public, is intended for informational use only and does not carry any legal authority. The reader is further advised that, while every effort is made to be faithful to the original Korean text, the FSS neither warrants the accuracy of the English translation nor assumes any liability for any mistranslation contained in this publication. The content of this publication is protected under the copyright laws of the Republic of Korea and as applicable elsewhere. Information obtained from this publication should be attributed to the Financial Supervisory Service of Korea. Please your questions, suggestions, or comments for FSS Weekly Newsletter to intlsupport@fss.or.kr. FSS Weekly Newsletter / SEPTEMBER 7-11,