글로벌 금융위기와 한국 경제 2009. 5월 Ladies and gentlemen, I would like to welcome all of you and thank you for taking the time to be with us today. My presentation today largely consists of three parts. Firstly, I will give you a brief overview of Korea’s real economy and financial market and move on to talk about newly emerging risk factors in the Korean economy and their effect on the economy. Then, I will close by introducing how the Korean government is responding to the economic challenges.

1. 한국경제의 위험요인 및 평가 18년 9월 17일 3시 35분 22초18년 9월 17일 3시 35분 22초 2 So I have talked about the main issues related to some of the risk factors in the Korean economy. As I have mentioned, there is no denying that the Korean economy is going through a tough time due to the global financial crisis and economic recession, but it is well equipped to absorb the shock coming from the world-wide crisis. And the Korean government, for its part, is making various policy efforts to minimize any harmful effect of the crisis on Korea’s financial and economic system. 18년 9월 17일 3시 35분 22초18년 9월 17일 3시 35분 22초 2 2

Risk요인 및 이에 따른 부정적 파급효과 우려 외화유동성 부족 급격한 외환시장 혼란, 차입여건 악화 -> 외채상환 리스크 #1 글로벌 경기 침체 -> 수출 급감 및 내수 위축 -> 마이너스 성장 #2 급속한 경기침체 소득 감소, 부동산 가격 하락 -> 가계 신용 부실 경기침체, 신용불안 -> 기업도산 -> 기업신용 부실 #3 민간부문 악화 가능성 There are four main risk factors in the Korean economy. The first concerns the possibility of a rapid deterioration of the domestic economy following a sharp decrease in exports and a slowdown in domestic consumption triggered by the global economic recession. The second risk factor is the possibility of private sector defaults including household credit defaults caused by real estate price fall and corporate bankruptcies resulting from economic recession and credit crunch. The third factor relates to the growing worry that Korean banks’ financial soundness can be deteriorated by non-performing household and corporate loans. In addition, people are increasingly concerned about a currency liquidity problem that can be caused by the mismatch between funding and fund management as indicated by high loan-to-deposit ratio. And lastly, the foreign currency liquidity problem and external debt defaults are continuously raised as a potential threat to the economy. 가계 및 기업 여신 부실, 자기투자 손실 -> 자본 건전성 악화 높은 예대율 -> 자금조달 mismatch -> 유동성 위기 은행 건전성 악화 가능성 #4 3

외채 구조 분석 #1 외채중 상당부분은 위험도가 매우 낮음 외채의 성질별 분류(08년말 기준) 외채의 성질별 분류(08년말 기준) 단기 외채중 실제 상환부담분 (08년말 기준) 총외채 US$ 380.5bn 총외채 US$ 380.5bn 母회사→ 子회사 대출 US$ 4.6bn 장기외채 : US$ 229.4bn 단기외채: US$ 151.0bn 선박수출 선수금 US$ 59.0bn Now, will there be external debt defaults? There had been worries about declining foreign currency reserves, but such worries have been eased as the foreign currency reserves started to increase in December last year and surpassed $ 200 billion again. Another good news is that Korea’s current account balance has swung to surplus after sustaining deficit till last September. The current account deficit was mainly caused by rising international oil prices, but now as oil prices are on a downward trend, Korea has begun to record current account surpluses. There are varying outlooks on Korea’s current account balance but the overwhelming opinion is that the surpluses are here to stay. And, If I breakdown the total debts by their nature, it is estimated that $152 billion out of 420 billion, or about one third, are virtually at no risk. In other words, they are not subject to any repayment burdens in the future. That is because 7 billions are pre-FDI funding, 94 billions have been incurred as a result of FX forwards hedging of pre-contracted future cash flows, and 51 billions are advance receipts for shipbuilding contracts. When we exclude these repayment-free debts, the genuine foreign debt of the Korean economy is about $268 billion, and far less below the acclaimed $420 billion level. 선물환 거래 관련 US$ 39.0bn 정부, 한은 US$ 17.1bn 위험도 낮은 외채 US$102.7bn 국내은행, 기업 US$ 66.2bn 외은 국내지점 US$ 67.7bn 단기외채의 43.8% 잠재적 risk가 있는 외채 규모 US$ 277.8bn 4 4

회복능력이 뛰어난 한국경제 #2 '09 GDP 예상 위기이후 회복능력 위기이후 회복능력 (YoY growth, %) (YoY growth, %) I will address these one by one, starting with the possibility of a rapid economic recession. Recently, some investment banks have forecasted a negative growth of the Korean economy in light of the adverse effect from the global financial crisis. Since the Korean economy largely depends on the global economic conditions, it is hard to predict its future growth. Even IMF and OECD are constantly changing their outlook on the Korean economy. Nevertheless, the situation in Korea is not so bad relative to other Asian countries. Nine investment banks forecast that Korea will grow by an average of -2.9 percent while Hong Kong, Taiwan and Singapore are expected to grow by -2.8 percent, -2.2 percent and -3.6 percent respectively, despite recording growth rates higher than Korea’s in 2007. Let me also highlight that the Korean economy is highly resilient to crisis. During the Asian financial crisis in 1998, Korea’s economic growth rate plummeted to -7 percent like Malaysia and Thailand, but Korea was much faster in overcoming the crisis as it posted 9.5 percent growth in 1999 while Malaysia and Thailand posted 6 percent and 4.4 percent growth respectively. So while it is true that the Korean economy is having a difficult time today, the latest growth forecasts and the past experience of the Asian financial crisis tell us that Korea’s economic fundamentals are relatively stronger than other Asian countries’. 10개기관 평균 (GS, JP, MS, SC, Barclays, ML, Deutsche, Citi, UBS, 09. 2월말 기준) 5 5

민간부문의 건전성 : 1. 가계 #3 안정적인 주택시장 낮은 수준의 주택담보대출 연체율 안정적인 주택담보인정비율 민간부문의 건전성 : 1. 가계 #3 안정적인 주택시장 낮은 수준의 주택담보대출 연체율 주택가격변동(YoY, %) US Subprime Mortgage * As of end of Sep-08 안정적인 주택담보인정비율 소득분위별 가계부채 변동 (in million wons) Next, let me counter the concern about private sector defaults, first focusing on the household sector. Nose-diving housing prices and ensuing household loan defaults are causing serious problems in the U.S. and Europe. But in Korea, we do not see any notable housing price bubble or drop in housing prices. First of all, the housing prices in Korea rose by 6.7 percent between 2001 and 2007 while they rose by 9.4 percent in the U.S., by 12.6 percent in the UK and by 9.7 percent in Ireland. The prices have stayed relatively stable in Korea with a price increase of 4.1 percent since 2008 while housing prices fluctuated much in other countries, with 15.0 percent decrease in the U.S., 4.0 percent decrease in the UK and 9.3 percent decline in Ireland. Korea’s household delinquency ratio is particularly low compared to the U.S. where the current financial crisis originated. While there is 20 percent delinquency on subprime mortgage loans and 4.34 percent on prime mortgage loans in the U.S., Korea’s household delinquency ratio is 0.5 percent as of end-November 2008, which is much lower than the U.S. prime loan delinquency ratio The loan-to-value (LTV) ratio is 94 percent for the U.S. subprime mortgage loan but is 45.4 percent for Korean mortgage loans. Therefore, we think there will be sufficient buffer against falling housing prices. Moreover, since the recent rise in mortgage loans in Korea is mostly attributable to the high-income class, there is smaller chance of defaults. LTV ratio(%) US Subprime Mortgage * (Lowest income) (Highest income) * As of end of '06 6 6

민간부문의 건전성 : 2. 기업부문 #3 이자보상비율 개선 차입금 의존도 감소 추세 부채비율의 지속적 감소 기업재무구조 국제 비교 Now let me address the risk factor of possible corporate sector default. Since the Asian financial crisis, Korea’s corporate sector has improved greatly in terms of the fiscal structure and profitability. The interest coverage ratio of the entire corporate sector used to be only 64 percent in 1998 but it rose to 405 percent by the end of 2007. (If necessary: The accurate data of 2008 is not available at the moment, but the interest coverage ratio of listed companies as of June 2008 was 1142 percent. So we judge that Korean firms maintain strong business capacity today.) The total borrowings and bonds payable to total assets soared to 50 percent in 1997 but continued falling ever since to reach 24 percent by the end of 2007. In addition, the debt to equity ratio once hit 425 percent but has fallen to 106 percent by the end of 2007. As these indicators illustrate, Korean companies’ financial structure has kept improving. Even under the current financial crisis, Korea’s corporate sector remains financially healthy relative to advanced countries like the U.S. and Japan. The liquidity ratio at the end of 2007 was 125 percent , similar to 133 percent of the U.S., 126 percent of Germany and 131 percent of Japan. But the equity to total asset ratio of Korea’s corporate sector is 48 percent, which is higher than in the U.S.’ 44 percent, Germany’s 34 percent and Japan’s 30 percent. Korea excels in terms of the debt to equity ratio as well. While Korea’s corporate sector debt ratio stands at 107 percent, the U.S., Germany and Japan recorded 127 percent, 191 percent and 232 percent corporate debt ratios respectively. Although further deterioration of the economy will affect Korean businesses, I am convinced that Korea’s corporate sector is stronger than it was during the previous financial crisis and it will absorb the shock better than others. 7 7

충분한 수준의 coverage ratio(충당금/고정이하여신) 한국 은행부문의 안정성 #4 낮은 연체율 충분한 수준의 coverage ratio(충당금/고정이하여신) 연체율(%) 낮은 수준의 Leverage 예대율의 점진적 감소(일반은행) The third risk factor is related to the soundness of banks. The greatest concern about banks’ soundness is the possibility of SME loan and household loan defaults. It is true that the delinquency ratio has been increasing under the present economic circumstances. However, the SME loan delinquency ratio and the household loan delinquency ratio stand at 2.36 percent and 0.66 percent respectively as of last December, which is not a worrisome level. The coverage ratio is 147.1 percent at the end of 2008. I understand there is an increasing concern over growing NPLs and additional provisioning undermining banks’ performances. But I can tell you that Korean banks have already acquired good shock absorbing capability based on the high coverage ratio. Foreign investors have often raised issues with Korean banks’ high loan-to-deposit ratio. The loan-to-deposit ratio is 101.6 percent including CD and 118.8 percent excluding CD, which is relatively high compared to other countries. However, it must be considered that risky assets and derivatives such as CDO and MBS, which are the main culprit behind today’s global financial crisis, account for very little in the investment portfolio of Korean banks. Assets / Tier 1 Capital (%) (%) 8 8

2. 한국 정부의 정책 대응 So I have talked about the main issues related to some of the risk factors in the Korean economy. As I have mentioned, there is no denying that the Korean economy is going through a tough time due to the global financial crisis and economic recession, but it is well equipped to absorb the shock coming from the world-wide crisis. And the Korean government, for its part, is making various policy efforts to minimize any harmful effect of the crisis on Korea’s financial and economic system. 9

위기극복을 위한 정책 Frameworks #1 #2 #3 #4 실물부문 금융부문 산업구조조정 사회안정망 확장재정정책 유동성공급 채권금융기관 중심의 상시적 구조조정 - 건설, 조선업 2차 신용평가(3월) - 대기업 재무구조 평가 시장형구조조정 방식 병행 - 구조조정 펀드 활성화(구조조정 기업 자산 매각 및 지분 인수 등) - 민간투자촉진을 위해 산업은행 적극 참여 신속한 구조조정을 위한 정부지원 - KAMCO 구조조정 기금신설 - 재정 및 세제 지원 실물지원 GDP대비 5.7%규모 경기부양책 16조 재정확대 35조 감세 상대적으로 양호한 재정건전성으로 추가경기 부양 여력 충분 기준금리 인하(5.25% →2.0%) 원화유동성 공급(23.3조원) - 은행채 매입 등 RP거래 확대 외화유동성 공급(550억불) 기업고용지원금 확대 및 근로시간단축 지원 등 일자리 지키기와 나누기 기초생활보장 제도 확대 저소득층 교육복지 강화 영세자영업자 및 중소기업 지원 실물기업지원 은행건전성 확보 금융지원 금년중 만기도래하는 중기대출 및 보증전액 만기연장 신기보 등을 통한 중소기업 대출 보증지원 확대(18.0조원) 채안펀드(10조원)를 통한 회사채시장 안정 I will introduce the measures the Korean government is pursuing to overcome the crisis There are three parts to the government’s policy efforts. The first is the liquidity support policy designed to ease the downward pressure on the economy. The second part is aimed at preventing private sector defaults. There are policies for reducing the burden on households as well as policies for providing financial support to the corporate sector and for promoting corporate restructuring. And the last part includes recapitalization policies for prevention of financial sector defaults. Now, let me go over them one by one. 은행의 자체적인 자본확충 노력(18조원) 은행자본확충펀드 조성(20조원) KAMCO를 통한 은행부실채권 매입 채무재조정 및 환승론를 통해 저소득층 금융신용 회복 지원 마이크로 크레딧 활성화 서민 금융이용자 보호 강화 10

실물부문: 경기부양책 #1-1 경기부양책 : 51.3조원 + @ 경기부양책 규모(% of GDP) GDP의 5.7% 수준 ᆞ사회간접자본 투자 및 사회안전망 강화를 위한 재정지출 확대 :16조원 ᆞ개인소득세 및 법인세 감면 : 35.3조원 + @ : 추가적인 재정 확대 지속적인 흑자 재정 유지 OECD 주요국 부채수준 비교(2008e) The Korean government has announced a fiscal stimulus package worth 51.3 trillion won. It includes corporate and personal tax cuts amounting to 35.3 trillion won and expansion of public expenditure worth 16 trillion won. The size of the public expenditure expansion accounts for 5.7 percent of GDP, which is smaller than that in China but larger than in countries seriously affected by the economic slowdown, such as the Japan and the EU. In addition, the Korean government is aggressively pursuing measures to provide liquidity amounting to a total of 90 trillion won, which includes 20 trillion won for local currency liquidity support and 55 billion won for foreign currency liquidity provision One thing to be noted is that the Korean government has the capacity for further expansion of expenditure. As you know, the Korean government is recording continued fiscal surpluses. As of September 2008, the fiscal surplus accounted for 2.3 percent of GDP, and we are expecting continued surpluses in 2009 despite possible reduction in size. The government also has room for additional interest rate cuts since the policy interest rate is currently higher than other countries at 2.5 percent. Moreover, the Korean government’s debt-to-GDP ratio is 32.6 percent, which is far below the OECD average of 79.7 percent. Government surplus (% of GDP) OECD Average: 79.7% Source: OECD Economic Outlook, Nov 2008 11

기업부문: 유동성공급 #1-2 시중은행의 중기대출 지원(월평균) 국책은행 및 보증기관 지원 확대(조원) 시중은행의 중기대출 지원(월평균) 국책은행 및 보증기관 지원 확대(조원) 68 54 산은 32 산은 27 기은 27 기은 36 64.3 46.3 신보 36.3 신보 28.7 기보 16.3 기보 12.2 기타 5.4 기타 11.7 2008 2009 보증 및 대출의 만기 연장 채권시장 안정펀드(10조원) Now, let me talk about the Korean government’s financial support to the corporate sector. In 2009, the Korean government plans to supply a new funding of 50 trillion won to SMEs. The government will try to front-load the funding in the first half of the year as the economic slowdown forecasted in the first half can take serious toll on the real economic sector. There is also a plan to strengthen support through policy banks and national guarantors. The corporate loan will be expanded by a total of 14 trillion won through 3.4 trillion won capital increase in KDB and IBK, and additional 1.1 trillion won will be invested in KODIT and KIBO to increase supply of guarantee by 11.7 trillion won. Moreover, the government has created a bond market stabilization fund to increase the demand for corporate bonds, thereby facilitating liquidity provision in the real economic sector. A total of 10 trillion won will be raised for the bond market stabilization fund via investment by financial institutions, which will be spent to purchase corporate bonds, P-CBO and PF ABCP. In case of bonds with low credit ratings, investment will be made through credit enhancement by KODIT and KIBO. The fund has been established on December 17 last year and has raised 5 trillion won thus far, and it will expand investment in bonds reaching their due. 산은 은행 보험사 증권사 2009년 만기도래 보증 신보, 기보 2조원 6조원 0.5조원 만기연장 1.5조원 채권시장안정펀드 2009년 만기도래 대출 회사채 중소기업P-CBO PF-ABCP 여전채 등 일반은행 12 12

금융시장안정화 : 유동성지원 #2-1 정책금리 인하 시중자금사정 개선 원화유동성 공급(23.3조원) 외화자금조달 여건 개선 리먼사태 이후 325bp 인하 (from 5.25% to 2.0%) 원화유동성 공급(23.3조원) RP 재매각․매입(16.8조원) 국고채 매입(1.0조원) 통안증권 중도 환매(0.7조원) 등 외화자금조달 여건 개선 외화 유동성 공급 기간물 차환율(정부지원 제외, %) The Korean government is pursuing measures designed to relieve the burden on households. First of all, the government is aggressively lowering the policy rate leading to joint fall in loan rates. This is expected to ease households’ debt repayment burden. Secondly, the government is considering expansion of credit restoration fund programs as a way to help struggling households. At present, the government is helping defaults of financial obligations with their debt restructuring to lessen the repayment burden and supporting high interest rate payers to transfer to cheaper loans through bank loans. Thirdly, the government is pursuing a number of measures to reduce the burden of mortgage repayment, one of which is the government’s guarantee of the depreciation in housing prices to the maximum of 100 million won. This guarantee is provided by the Korea Housing Finance Corporation for the loans that exceed the LTV limit due to the declining housing price. In addition, the government is extending the due date and the grace period of loans including mortgage. And if a lender wishes to transfer from a floating rate loan to a fixed rate loan, the government exempts the lender from the early repayment fee as a way to ease the burden of high interest rate. 정부,한은 총 550억달러 외화유동성 공급 - 수출입금융 210억달러 - 시중유동성공급 340억달러 미,일,중과 통화스왑(각각 300억달러, 총 900억달러) 은행 등 외화차입에 대한 지급보증(총 1000억달러 규모) 외국인 국채매입시 법인세 및 소득세 면제 13 13

Financial Sector: Enhancing Banks’ Soundness #2-2 자산건전성 제고 자본 확충 - 은행 및 저축은행 PF 부실채권 인수 KAMCO 구조조정 기금 40조원 규모 금융기관 부실채권 또는 구조조정 기업의 자산 매입 2014년까지 한시적 운용 은행자본확충펀드 20조원 금융안정기금 은행별 한도 설정, 필요시 인출 가능 후순위채, 신종자본증권 등 매입으로 주주권 및 경영권 간섭 없음 자체적인 자본확충 (18조원) - 중소기업 지원 등 실물지원 기능 제고와 관련한 MOU 체결 - 규모는 추후 확정 자본확충 자본확충 부실자산매입 부실자산매입 다음으로 금융기관의 건전성 제고를 위한 노력에 대해서 말씀드리겠음 먼저 자산 건전성 제고를 위해 금융기관이 보유한 부실채권을 매입토록 지원하고 있음. 현재 진행중인 저축은행 PF 부실채권 매입을 3월중 완료하고 은행이 보유한 PF 부실채권 매입을 4~5월중 추진할 계획 특히 한국 정부는 3.13일 40조원 규모의 구조조정 기금을 조성하여 금융기관이 보유한 부실채권 및 구조조정 기업의 자산을 매입토록 할것을 결정하였음 또한 자본확충을 위한 노력도 지속적으로 추진중 지난해 11월 이후 18조원 가까이 이루어진 은행 자체적인 자본확충 노력에 더불어, 20조원 규모의 은행자본확충펀드를 조성하여 금융기관 자본확충을 지원. 다만 이는 은행별로 한도를 설정하고 필요시 인출토록 하는 시스템이며, 후순위채 및 신종자본 증권 등을 매입함으로써 주주권에 대한 간섭이 없으며 실물 및 구조조정 지원 의무 만을 규정하여 경영권 간섭은 없음 또한 3.13일 정상금융기관에도 선제적인 자본확충이 가능하도록 금융안정기금을 설치하는 방안을 마련하였음. 현재 규모는 확정되지 않았으나 출자, 대출, 채무 보증 등으로 금융기관에 대한 자금을 지원할 게획, 다만 기금의 사후 관리를 위해 중소기업지원 등 실물지원기능 제고 등과 관련한 MOU 체결 등 통제 장치 마련 비으 은행 비은행 비은행 정상 부실(우려) 부실금융기관 정리 예금보험공사 - 출자, 출연 등을 통한 지원

기업구조조정 #3 구조조정 추진 원칙 일시적 유동성 위험 유동성 지원 부실 징후 구조조정 회생 불능 퇴 출 액션 플랜 #1 채권 금융기관 주도 부실 징후 구조조정 회생 불능 퇴 출 액션 플랜 #1 채권금융기관 중심의 상시적 구조조정 건설, 조선업2차 구조조정을 위한 신용평가 (3월) 관계부처 협의를 통해 업종별 구조조정의 긴급성 및 방향 등을 점검 채권은행 주도의 대기업 재무구조평가 실시(4월) #2 시장 친화적인 구조조정 기업구조조정펀드 활성화(구조조정 기업의 자산 매각, 지분 인수 등) 민간투자 유치를 위해 산업은행 등 적극 참여 필요시 PEF 관련 제도 개선 #3 구조조정 지원체계 정비 은행 자본확충펀드(20조원)를 구조조정 지원에 활용 KAMCO의 부실채권 매입 확대, 구조조정 지원을 위한 구조조정기금 설립 구조조정 촉진을 위한 재정 및 세제 지원

사회안전망 확충: 금융부문 지원 #4 주택가격 하락분에 대한 정부 지원 (최고 1억원) 만기 및 거치기간 연장 주택담보대출 등 가계대출 부담 완화 소액서민금융재단 복지사업 확대 주택가격 하락분에 대한 정부 지원 (최고 1억원) 만기 및 거치기간 연장 - 만기는 최대 30~35년, 거치기간은 최대 5~10년 연장 변동금리부 대출자가 고정금리 대출로 전환을 희망할 경우 중도 상환 수수료를 면제하여 금리 부담 완화 영세상인, 사회적 기업, 한부모 가정 등에 대한 마이크로 크레딧 활성화 지원 규모 270억원 → 440억원으로 확대 5억원 (3억원 대출) 최고 1억원 보증지원 4억원 (3억원 대출) 신용회복기금 사업 확대 금융채무 불이행자 고금리 부담자 채무재조정 환승론 지원인원(만명) 46 72 2008 2009 2.2 7.3 대상채권(조원)

사회안전망 확충: 실물부문 지원 #4 일자리 나누기 일자리 창출효과가 큰 산업에 대한 금융혜택 지원 기업은행 일자리창출기업 지원 펀드에 300억원 지원, 산업은행 시설자금 지원을 위한 7조원 펀드 조성 Total of 10 조원 규모 고용 유지 지원요건 완화 및 지원 수준 증가 중소기업 급여 2/3 수준에서 ¾ 수준으로 확대 대기업 급여 1/2 수준에서 2/3 수준으로 확대 근로시간 단축 지원금 확대 신 빈곤층 보호 기초생활보장 대상자 확대 및 사각지대 축소 * 최저생계비: (‘08) 127만원 (‘09) 133만원 * 기초생활보장 급여 수급자: (‘08) 157.6만명 (‘09) 158.6만명 교육복지 확대 저소득층을 위한 장학금 지원 확대 초등학생 방과후 학교 프로그램 확대 영세자영업자 및 중소기업 지원 자영업자를 위한 유가환급급 지원(’08-’09 8,600억원) 및 부가세 경감 대기업- 중소기업간 상생협력 추진