More than 2x in 2 Years
It has been revealed that the five major domestic banks in South Korea – KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup – have increased their real estate investments in foreign countries by more than two-fold over the past two years.
According to data received by Min Byeong-deok, a member of the National Assembly’s Political Affairs Committee, from the Financial Supervisory Service on Oct. 17, the overseas real estate investment balance of the five major banks increased from 4.3 trillion won (US$3.17 billion) at the end of June 2021 to 8.8 trillion won at the end of June 2023, marking a 2.04-fold increase.
During this period, KB Bank notably saw the most significant increase in overseas real estate investment balance, growing from 1.4 trillion won to 3.6 trillion won. Hana Bank also increased its balance from 1 trillion won to 2.1 trillion won. Woori Bank’s investment grew from 1 trillion won to 1.8 trillion won, Shinhan Bank’s from 700 billion won to 1 trillion won, and NH Bank’s from 200 billion won to 300 billion won.
During the period, the five major banks have also continued to increase their overseas investment in social overhead capital (SOC) and corporate investments. Overseas SOC investment, which was 5.1 trillion won at the end of June 2021, increased to 7.6 trillion won at the end of June 2023, marking a 1.5-fold increase. Foreign corporate investments similarly grew from 2.5 trillion won to 7 trillion won, a 2.8-fold increase.
During the COVID-19 pandemic, the five major banks have increased their foreign investments in various sectors. However, the particular focus on the overseas real estate investment balance is due to concerns that, with remote work becoming more established in the post-COVID era, a prolonged downturn in foreign real estate markets could potentially lead to a decrease in asset value and expand the financial sector’s losses.