Busan Bank’s asset quality and profitability poised to further weaken: report

It should maintain a strong funding structure thanks to its deposit base, however.

Busan Bank faces pressures from its deteriorating asset quality on the back of weak economic growth, sluggish domestic consumption, and slowing exports, says Moody’s.

The South Korean bank’s asset quality and profitability may further weaken due to a “time lag” before the declining interest rate, and the government’s planned supplementary budget that will improve repayment capacity of borrowers, the ratings agency said in its latest ratings report of the bank, where it revised its outlook to negative from stable.

However, Busan Bank should maintain a strong funding structure thanks to its deposit base in its home region.

The bank should also enjoy a very high level of support from the Korean government in times of need, Moody’s said.

Busan Bank’s problem loans to gross loans ratio rose to 1.1% as of 31 March 2025, from 0.9% in end-2024 and 0.5% in end-2023.

“The ratio would have been higher without a significant write-down and sale of problem loans the bank had completed,” Moody’s said.

The bank's annualized net income to tangible assets ratio declined to 0.4% in the first quarter of 2025 as a result of rising credit costs.