GE Capital hopes to carve niche in unsecured loan market

GE Capital Korea, a unit of GE Consumer Finance said yesterday that it will bolster its presence in the Korean consumer market by focusing on the unsecured loan market.

"We intend to focus on `underserved consumers,` who we believe can become a potential customer," said Park Hyun, president and chief executive officer of GE Capital in a news briefing held yesterday to mark its brand launching.

GE Capital Korea will be renamed as GE Money Korea as part of the world-wide move to rename GE`s Consumer Finance business, he said.

The consumer finance market in Korea, what he describes as highly competitive and sophisticated, is worth $475 billion. Mortgage loans account for almost half of the market. While the secured loan market is worth around $49 billion, the unsecured loan sector is valued at around $168 billion.

As the demand for sophisticated financial products is increasingly significant in Korea, both domestic and global financial institutions are eying the lucrative local consumer financing markets. They have introduced a variety of financial products and services which were not available until recently to the local market.

Korea is the second largest consumer finance market in Asia with an annual growth rate of 16 percent over the past five years.

Park said the company`s target customers are young newlyweds in their 30s, business owners in their late 30s and 40s and those in their 20s seeking independence.

GE Capital, established in 1996, has focused on auto finance, key money finance and secured loans, with 10 branches operating across the nation.

Key money finance allows customers to borrow money using their key money deposit as collateral.

The loans finance up to 200 million won at an interest rate ranging between 9.9 percent and 15 percent. The rate is higher than what domestic lenders and other financial institutions offer. The terms range from 6 to 36 months.

Unsecured loans aren`t common at domestic banks and other financial institutions as they regard the lending riskier. Such lending practices make it difficult for those who do not have any collateral for securing any loans without paying a hefty interest rate.

GE also has a 38 percent stake in Hyundai Capital Co., the nation`s No.1 auto financing service provider. It also offers key money loans and auto loans for automotive companies excluding Hyundai Automotive group.

GE Consumer Finance is the global consumer lending unit of the General Electric Company.

(jungmin@heraldm.com)



By Kim Jung-min