South Korean savings banks saw their net losses nearly halve in fiscal 2012 from a year earlier, as they reduced loss reserves upon the stringent restructuring after a whirl of bankruptcies, the financial regulator said Wednesday.

The combined net loss of 91 savings banks here came in at 880.3 billion won ($791.9 million) between July 2012 and June this year, down 45.9 percent from the 1.7 trillion-won net loss logged in the previous fiscal year, according to the Financial Supervisory Service (FSS). They close their books in June.

The sharp decline in the earnings came as their loan loss reserves decreased after numerous players underwent a tough debt restructuring process, the FSS said.

Between 2011 and 2012, local savings banks went through an industry-wide overhaul as more than 20 secondary lenders became insolvent due to lax management. Some were shut down for good while others were taken over by larger banks.

Many of them extended loans to companies engaged in property financing without a thorough assessment on their repayment ability or business projects, incurring massive loan losses when the local real estate sector faltered due to an oversupply.

Since the painful debt workout, their loan loss reserves shrank 20.1 percent to 1.4 trillion won over the cited period.

But the delinquency rate of the savings banks rose slightly to 21.7 percent from a year ago, largely because the bulk of their bad loans stem from property-related businesses that are still suffering a slump.

The capital adequacy ratio, a key gauge of financial soundness, stood at 10.82 percent, up 3.4 percentage points from the previous year, the regulator said.

Their combined assets totaled 43.9 trillion won as of the end of June, down by 6.7 trillion won from a year ago, according to the FSS. (Yonhap News)