MG Community Credit Cooperatives is speeding up efforts to improve asset quality, including selling nearly 3.5 trillion won worth of non-performing loans (NPLs) in the first half of this year and merging 21 member cooperatives. It plans to manage delinquency ratios and restructure weak cooperatives in parallel, with the aim of returning to profit in 2028.

The MG Community Credit Cooperatives Federation said on Wednesday that 1,251 MG Community Credit Cooperatives nationwide sold a total of 3.48 trillion won of NPLs in the first half of this year. Of that, it sold 3.19 trillion won through MG Asset Management Co (AMCO), a specialist NPL management company launched in July last year. The remainder was resolved through NPL funds, Korea Asset Management Corp and asset securitisation.

As the NPL clean-up progressed, the delinquency ratio fell to 5.08 percent at end-2025 from 8.37 percent at end-June 2025. Earlier, the MG Community Credit Cooperatives delinquency ratio was 7.24 percent at end-June 2024 and 6.81 percent at end-2024.

It is also expanding channels for selling NPLs. In May last year, MG Community Credit Cooperatives formed a 217.2 billion won NPL fund with four regional banks including Busan Bank and Gwangju Bank. In December last year, it formed a 132.5 billion won mutual finance NPL fund with the National Credit Union Federation of Korea and others, which it plans to operate through the end of this year.

It is also expanding mergers among cooperatives. MG Community Credit Cooperatives merged 21 cooperatives in the first half of this year and is targeting a total of 51 mergers for the full year. That compares with seven mergers in the first half of last year. It plans to operate existing outlets of merged cooperatives as branches to maintain access to financial services.

The Ministry of the Interior and Safety and financial authorities extended the operation of a 'special asset-quality management task force (TF)' launched in December last year through the end of this year.

In the first half, MG Community Credit Cooperatives introduced the Financial Supervisory Service's data submission support system (CPC) and a deposit monitoring system. It also plans to restrict new corporate lending with a high risk of delinquency and implement a rule from 2027 limiting PF loan exposure to 20 percent of total loans.

MG Community Credit Cooperatives holds a total of 6.7 trillion won in reserves. They consist of 2.7 trillion won in statutory reserves, 800.0 billion won in special reserves and 3.2 trillion won in discretionary reserves. A bill to revise the MG Community Credit Cooperatives Act, expanding the scope for using statutory reserves to cover losses, has been submitted to the National Assembly.

A federation official said, "MG Community Credit Cooperatives is currently doing everything it can internally and externally to manage soundness in order to restore trust." The official said, "We will do our best to be reborn as a trusted financial institution."