Financial Services Commission (FSC) Vice Chairman Kim So-young speaks to foreign financial institutions, including investment banks operating in Korea and Singapore, via a video conference call at the Government Complex in central Seoul, Tuesday. Courtesy of FSC

Financial authorities emphasized the stability of the Korean financial market with a firm determination to maintain the robust market order, aiming to allay foreign investors' concerns over the country's real estate project financing risks and the latest increase in banks' delinquency rates.

According to the Financial Services Commission (FSC), Korea's top financial regulator, Vice Chairman Kim So-young, held a video conference on Tuesday with foreign financial institutions, such as investment banks operating in Korea and in Singapore.

During the video conference, Kim provided an overview of the economic situation and financial market in Korea.

He underlined that the Korean financial market maintains solid stability despite various domestic and international uncertainties, with financial institutions possessing sufficient capacity to preemptively absorb losses.

"Furthermore, the Korean government holds ample resources, including 94 trillion won ($69 billion) worth of market stabilization programs, to respond to any crisis situations, ensuring the continuity of a stable market environment in the future," the vice chairman said during the video conference.

Regarding the real estate project financing sector, Kim said the government has set a principle of "orderly soft landing," seeking to ensure smooth funding for viable businesses while inducing restructuring for those lacking viability.

He added that the Korean economy is entering a recovery phase.

FSC Vice Chairman Kim So-young speaks to foreign financial institutions, including investment banks operating in Korea and Singapore, via a video conference call at the Government Complex in central Seoul, Tuesday. Courtesy of FSC

With regard to household debts, the vice chief of the FSC underscored that the ratio of household debt to GDP has declined for two consecutive years, owing to the authorities' stable management.

He explained that the Korean government will continuously seek to pursue both quantitative and qualitative improvements in the household debt situation, considering that households' debt ratio remains high compared to major countries.

He also stressed that although banks' delinquency rates have slightly risen lately, they are still manageable and remain below past averages. He mentioned that such rising delinquency rates have been observed in major overseas countries as well amid the process of monetary tightening, a somewhat inevitable phenomenon accompanying the resolution of financial imbalances accumulated during the pandemic period.

Lastly, Kim reiterated the Korean government will continue to push forward its series of programs to support local stock markets and increase stock valuation, thereby alleviating the so-called Korea discount.

Tax support measures for the initiatives, along with related developments in indexes and exchange-traded funds, will be announced later this year.