Woori Financial Co. warned that household debts have grown so big that many borrowers are facing default on some of their loans as concerned banks have made their borrowing conditions more difficult for home loan borrowers.

Many young people are turning to capital loan companies for loans on credit as bank loans with lower interest rates have become difficult to get. They are easy to get because credit conditions are easier, they can be made in a day, they can borrow the exact amount they need, and the loans are repayable when they want, which is why they are popular among salaried workers and small business owners as well.

Another reason for the popularity of capital loan companies has been that they provide loans on the internet and via telephone. The interest rates are also lower since they don’t charge mediation fees. Borrowers can find out how much they can borrow and the interest rates even before a credit check and they don’t have the same problems the borrowers of loans from private financing or private loan companies would have.

Woori Financial, especially, has made it easier for salaried people, small business owners, and housewives to get loans from the company fast and conveniently with its Woori Direct Loan products, which charges only 6.9 percent on a maximum loan of 40 million won with no additional fees. The company can confirm the borrower’s credit information through public guarantors including their job situation and income, and phone service is provided to give borrowers quicker service.

Woori Financial is an affiliate of Woori Financial Group, born of a merger between Hanmi Capital and Ssangyong Capital in 2007. The company deals mainly with car leasing, installment finance, and small household loans, all of them consumer financing products with high returns. The company has been growing at more than 10 percent annually on average under the wing its mother group. Net income more than doubled last year hitting 51.7 billion won, up from 25.7 billion won in 2010.

The company is expected to post 10 percent asset growth in the first half of this year due to its focus on auto financing, among others, and expects to record 10 percent growth in the second half, too, as it will continue to target the auto financing sector as its main growth business. 

The company has decided to pursue the safer auto-financing sector since household loans have become risk-laden. Officials of the company recalled that auto financing stayed healthy even during financial crises in the past because they include financing for commercial vehicles such as buses and trucks, and replacement financing for sedans.

Synergy with Woori Bank is being looked at as a positive factor to help the growth of Woori Financial as household loan customers who can’t borrow from the bank can turn to Woori Financial as an alternative financing source. In fact, the company has been earning some 20 billion won in net profit monthly from loans extended to those customers. The company makes more profit from those loans because it can save costs on such expenses as salaries and offices.

Research staff at Taurus Investment and Securities figures that Woori Financial has seen a big rise in its profit due to its clearance of bad assets last year, projecting that operating profit and net profit would rise 10 percent and 16 percent, respectively, this year at 79.4 billion won and 60.2 billion won.

Securities investors expect Woori Financial will pay a high dividend this year, up to around 5.3 percent, or 836 won per share, from 6.4 percent or 6794 won per share last year.