[Edaily Marketin Reporter KIM YEON-SEO ] Meritz Financial Group(138040)is planning to issue up to 280 billion won in public corporate bonds. While the strong business competitiveness of its core subsidiaries, Meritz Fire & Marine Insurance and Meritz Securities, underpins the group’s creditworthiness, analysts note that the burden of managing the group’s asset quality is increasing due to losses in domestic and international alternative investments and exposure related to Homeplus.

According to investment banking (IB) industry sources on the 13th, Meritz Financial Group is preparing to issue corporate bonds totaling 150 billion won, including 80 billion won in 2-year bonds and 70 billion won in 3-year bonds. Depending on the results of the bookbuilding process, the company plans to increase the issuance amount to a maximum of 280 billion won.

The target yield band for both the 2-year and 3-year bonds was set at –30 to +30 basis points (bps; 1 bp = 0.01 percentage points) relative to the ratings issued by independent private bond rating agencies. NH INVESTMENT & SECURITIES, KB Securities, Korea Investment & Securities, and Shinhan Investment & Securities are serving as lead underwriters. Meritz Financial Group is expected to conduct a book-building process for institutional investors later this month and issue the corporate bonds in August.

Meritz Financial Group is the holding company of the Meritz Financial Group, which encompasses insurance, securities, and capital companies. It has established a strong business foundation centered on its core subsidiaries, Meritz Fire & Marine Insurance (AA+) and Meritz Securities (AA0).

Meritz Fire & Marine Insurance maintains a mid-to-upper-tier market position in the long-term protection insurance market. With an average return on assets (ROA) of 4.1% over the last three years (2023–2025), it is regarded as having a solid operating foundation and strong profit-generating capacity.

Meritz Securities also holds a strong market position, particularly in its investment banking (IB) and asset management divisions. As of the end of March 2026, its capital stood at 7.8 trillion won, and its business competitiveness is expected to be further strengthened by leveraging this expanded capital base. Meritz Capital also maintains a solid business foundation based on the group’s capital strength and sales network.

Meritz Financial Group: Asset Quality Indicators Rapidly Deteriorating

However, the group’s asset quality indicators have deteriorated rapidly in recent times. On a consolidated basis, the non-performing loan (NPL) ratio rose from 1.9% at the end of 2023 to 3.2% at the end of 2024 and 6.9% at the end of 2025. Although it fell slightly to 6.4% at the end of March this year, it remains at a high level. The non-performing loan ratio refers to the proportion of total loans classified as non-performing—those with a low likelihood of principal and interest recovery.

This is due to the deterioration of domestic and international alternative investment assets acquired during the low-interest-rate period, as well as the classification of Homeplus-related exposures as non-performing loans. It has also been determined that some large-scale overseas transactions jointly invested in by affiliates are included among assets requiring close monitoring.

Given the rise in the non-performing loan ratio, there is a possibility of additional capital injections or losses at large projects jointly invested in by affiliates. Credit rating agencies have identified the progress of projects at risk of default, the level of provisions set aside, the likelihood of recovering funds, and the scale of expected losses relative to each affiliate’s equity as key monitoring factors.

“Exposure to Homeplus Is a Burden”

Exposure related to Homeplus is also a concern. As of the end of March this year, Meritz Financial Group’s credit exposure related to Homeplus stood at approximately 1.2 trillion won. Meritz Financial Group holds the first-priority beneficial interest in the collateral trust for Homeplus stores, which legally allows it to exercise its security rights.

However, there is uncertainty regarding the timing of loan recovery through the disposition of collateral. Analysts note that, in addition to the burden of future support for subsidiaries—such as capital increases or the acquisition of hybrid capital securities—the group must also monitor the impact on its financial stability stemming from the timing of Homeplus-related loan recoveries and the level of provisions set aside.

“Prospects for Maintaining Strong Business Performance Centered on Insurance and Securities”

The financial stability of the holding company itself is still assessed to be at a manageable level. Meritz Financial Group has a stable revenue structure, including dividend income of 1.3 trillion won from its subsidiaries in both 2024 and 2025. As of the end of March this year, its double leverage ratio and debt-to-equity ratio stood at 112.1% and 49.3%, respectively, which are favorable levels.

However, as borrowing and the issuance of hybrid capital securities expand on a standalone basis, and given the ongoing policy of supporting subsidiaries and returning 50% of consolidated net income to shareholders, the financial burden is likely to increase. While the holding company’s financial burden is considered manageable given the group’s strong profit-generating capacity, analysts assess that the high debt burden may persist for the time being.

Lee Jae-woo, a senior analyst at Korea Credit Rating, stated, “Meritz Financial Group is expected to maintain excellent business competitiveness and profit-generating capacity, centered on insurance and securities,” but added, “With the non-performing loan ratio on the rise and some large transactions jointly invested in by affiliates classified as ‘under observation’ or lower, the burden of managing asset quality is likely to increase in the short to medium term.”