Kyongnam Bank likely to maintain good funding through 2026: Moody’s

But construction and retail sector loans may be a weakness.

Kyongnam Bank is expected to maintain good funding through 2026, although there is still risk of asset quality deteriorating on weak operating environments in its home province.

The South Korean regional bank is expected to maintain good funding in the next 12-18 months, thanks to its well diversified and granular deposit base, Moody’s Ratings said.

“That said, there is a risk of asset quality deterioration given weak operating environment in Gyeongnam province and Ulsan city, stemming from loans to small- and medium-sized enterprises (SME), particularly in construction and retail sectors, as well as unsecured personal loans,” the ratings agency warned.

Kyongnam Bank has good asset quality with its problem loans to gross loans ratio at 0.8% as of 31 March 2025, it added.

Net income to tangible assets ratio may decline to around 0.4%-0.5% through 2026 due to narrowing net interest margins from declining market rates.

The bank’s credit costs are also expected to remain high.

Liquidity is expected to remain weak, Moody’s said.