1) Bank Loans
Despite the economic slowdown, loans provided by 18 domestic banks to small and medium-sized enterprises (SMEs) increased to total KRW434.3 trillion as of end-April this year on the back of expanded guarantees and maturity extensions.
For the first four months of 2009, the net increase in SME loans was KRW12.0 trillion from the end of last year. When adding the actual support amount, including SME bank deposit-loan nettings, which is to be reflected in MOU evaluations, the net increase amounted to KRW13.7 trillion.
In April alone, the preliminary net increase in SME loans was KRW2.2 trillion won, lower than a monthly average of KRW3.0 – 3.7 trillion during the first three months of the year. The drop was largely attributed to NACF’s KRW900 billion policy fund coming due and sluggish overall demand for capital including slowed issuance of credit guarantees.
More recently, conditions have also turned in favor of small and medium-sized companies, as witnessed with the Business Survey Index going up from 56 in January 2009 to 83 in April.
2) Fast Track Program
Keeping up with the high pace set in January this year, a total of KRW2.6 trillion was extended to 1,231 companies through the Fast Track program in April.
Since the Fast Track program was initiated on October 13, 2008, a total of 8,194 companies have been extended KRW13.3 trillion in support, KRW3.8 trillion of which was provided to 583 companies that had incurred losses in KIKO and other currency option contracts.
3) Guarantees & Bank Loan Maturity Extensions
In April, there was KRW4.9 trillion in new guarantees, 3.1 times more than the KRW1.6 trillion issued during the same period last year. But as the number of applications for guarantees has fallen on month by 14.8% to 66,307 cases inApril, the pace of increase is slowing for both guarantee applications and their issues.
Also last month, there was KRW3.6 trillion in maturity extensions with a 95% rollover rate.
From January to April, KRW9.5 trillion was extended in support of core businesses, including the KRW3.9 trillion provided in April alone. It accounted for 38% of KRW25.0 trillion in total provision, which should help to boost growth and parlay economic recovery.
In April, KRW46.2 trillion in matured bank loans was extended, including KRW3.6 trillion in guaranteed loans and KRW42.6 trillion in regular loans.
4) Future Support
Financial support will continue to be extended in the interests of rejuvenating the real economy. But by reflecting changing conditions in economic outlook, such as the fall in capital demand and improved conditions for SMEs recently, the FSC/FSS will review to exercise flexibility in adjusting the loan target for SMEs as agreed in the MOU between banks and the government.
* Please refer to the attached PDF for details.