IBK chief says many Korean firms in worse state than financial crisis

Industrial Bank of Korea (IBK) Chairman Kim Sung-tae holds a nationwide branch manager meeting at the bank’s regional headquarters in Daejeon on July 21. [Courtesy of IBK]

Industrial Bank of Korea (IBK) Chairman Kim Sung-tae has issued a warning that the number of South Korean companies that are unable to cover their borrowing costs from operating income is higher than it was during the 2008 financial crisis due to rapid rising interest rates.

He also pledged unwavering support for companies affected by heavy rains.

Last Friday, Kim Sung-tae held a nationwide branch manager meeting at the bank’s regional headquarters in Daejeon, according to IBK’s announcement on Sunday.

Kim expressed his concern, stating,

“The proportion of companies unable to bear loan interest is higher than during the global financial crisis. The banking business, closely connected to the real economy, needs to strive for a delicate balance, not only in financial structure but also in customer trust and social responsibility,” Kim stressed.

Among non-financial companies subject to external audits, the interest coverage ratio, comparing operating profit to interest expenses, was at 30.9 percent during the 2008 global financial crisis. However, this figure increased to 35.1 percent in 2022.

During his visit to the administrative welfare center in Osong, where residents affected by concentrated heavy rains are temporarily residing, Kim delivered relief supplies. He also visited Samho Machine, a company impacted by the flood, to listen to their business difficulties.

“We hope we can be of some help to the victims. Our hearts go out to the small- and medium-sized enterprises and mom and pop shops affected by the floods, and we will do what we can to support them, including providing funding to repair damage to their facilities,” he said.