Introduction to ACSIC amp KODIT

Overview

Contents

Credit Guarantee Schemes of Main Members

Introduction to KODIT

Wrap-up

Overview

1 ACSIC Members

3

I Overview

ACSIC Asian Credit Supplementation Institution Confederation (since 1987)

Eligible Countries Asian countries excluding areas to the West and North of Pakistan

Multiple members Korea(3) Indonesia(3) Japan(2)

1 Observer Papua New Guinea

3

2 Major Activities I Overview

26th Annual Conference November 2013 (Busan Korea)

4

3 Performance of Member Countries I Overview

Classification Total Guarantee Supplies

Outstanding Guarantees

No of SME-Beneficiaries

Japan 113557 373609 1500067

Korea 62457 72004 1117568

Taiwan 31436 21047 126864

Indonesia 7425 9282 3782098

Malaysia 873 3742 48759

Thailand 1634 3523 43528

India 2819 No Records 254000

Sri Lanka 32 No Records 2307

Nepal 7 No Records 12727

Philippines 1 14 465

Total 220241 483208 6888383

(Unit million USD number)

Japan Korea Taiwan as of the end of 2012 Others as of the end of 2011

5

Credit Guarantee Schemes of Major Members

1 Korea II Credit Guarantee Schemes of Members

Contribution

Local Gov

National Government

Banks Contribution

Counter- guarantee

SMEs

Loan

KOTEC

16 CGFs

KODIT Credit Guarantee

KODIT Korea Credit Guarantee Fund KOTEC Korea Technology Finance Corporation KOREG Korea Federation of Credit Guarantee Foundations CGF Credit Guarantee Foundation

Abbreviations

7

Overview

Contents

Credit Guarantee Schemes of Main Members

Introduction to KODIT

Wrap-up

Overview

1 ACSIC Members

3

I Overview

ACSIC Asian Credit Supplementation Institution Confederation (since 1987)

Eligible Countries Asian countries excluding areas to the West and North of Pakistan

Multiple members Korea(3) Indonesia(3) Japan(2)

1 Observer Papua New Guinea

3

2 Major Activities I Overview

26th Annual Conference November 2013 (Busan Korea)

4

3 Performance of Member Countries I Overview

Classification Total Guarantee Supplies

Outstanding Guarantees

No of SME-Beneficiaries

Japan 113557 373609 1500067

Korea 62457 72004 1117568

Taiwan 31436 21047 126864

Indonesia 7425 9282 3782098

Malaysia 873 3742 48759

Thailand 1634 3523 43528

India 2819 No Records 254000

Sri Lanka 32 No Records 2307

Nepal 7 No Records 12727

Philippines 1 14 465

Total 220241 483208 6888383

(Unit million USD number)

Japan Korea Taiwan as of the end of 2012 Others as of the end of 2011

5

Credit Guarantee Schemes of Major Members

1 Korea II Credit Guarantee Schemes of Members

Contribution

Local Gov

National Government

Banks Contribution

Counter- guarantee

SMEs

Loan

KOTEC

16 CGFs

KODIT Credit Guarantee

KODIT Korea Credit Guarantee Fund KOTEC Korea Technology Finance Corporation KOREG Korea Federation of Credit Guarantee Foundations CGF Credit Guarantee Foundation

Abbreviations

7

Overview

1 ACSIC Members

3

I Overview

ACSIC Asian Credit Supplementation Institution Confederation (since 1987)

Eligible Countries Asian countries excluding areas to the West and North of Pakistan

Multiple members Korea(3) Indonesia(3) Japan(2)

1 Observer Papua New Guinea

3

2 Major Activities I Overview

26th Annual Conference November 2013 (Busan Korea)

4

3 Performance of Member Countries I Overview

Classification Total Guarantee Supplies

Outstanding Guarantees

No of SME-Beneficiaries

Japan 113557 373609 1500067

Korea 62457 72004 1117568

Taiwan 31436 21047 126864

Indonesia 7425 9282 3782098

Malaysia 873 3742 48759

Thailand 1634 3523 43528

India 2819 No Records 254000

Sri Lanka 32 No Records 2307

Nepal 7 No Records 12727

Philippines 1 14 465

Total 220241 483208 6888383

(Unit million USD number)

Japan Korea Taiwan as of the end of 2012 Others as of the end of 2011

5

Credit Guarantee Schemes of Major Members

1 Korea II Credit Guarantee Schemes of Members

Contribution

Local Gov

National Government

Banks Contribution

Counter- guarantee

SMEs

Loan

KOTEC

16 CGFs

KODIT Credit Guarantee

KODIT Korea Credit Guarantee Fund KOTEC Korea Technology Finance Corporation KOREG Korea Federation of Credit Guarantee Foundations CGF Credit Guarantee Foundation

Abbreviations

7

1 ACSIC Members

3

I Overview

ACSIC Asian Credit Supplementation Institution Confederation (since 1987)

Eligible Countries Asian countries excluding areas to the West and North of Pakistan

Multiple members Korea(3) Indonesia(3) Japan(2)

1 Observer Papua New Guinea

3

2 Major Activities I Overview

26th Annual Conference November 2013 (Busan Korea)

4

3 Performance of Member Countries I Overview

Classification Total Guarantee Supplies

Outstanding Guarantees

No of SME-Beneficiaries

Japan 113557 373609 1500067

Korea 62457 72004 1117568

Taiwan 31436 21047 126864

Indonesia 7425 9282 3782098

Malaysia 873 3742 48759

Thailand 1634 3523 43528

India 2819 No Records 254000

Sri Lanka 32 No Records 2307

Nepal 7 No Records 12727

Philippines 1 14 465

Total 220241 483208 6888383

(Unit million USD number)

Japan Korea Taiwan as of the end of 2012 Others as of the end of 2011

5

Credit Guarantee Schemes of Major Members

1 Korea II Credit Guarantee Schemes of Members

Contribution

Local Gov

National Government

Banks Contribution

Counter- guarantee

SMEs

Loan

KOTEC

16 CGFs

KODIT Credit Guarantee

KODIT Korea Credit Guarantee Fund KOTEC Korea Technology Finance Corporation KOREG Korea Federation of Credit Guarantee Foundations CGF Credit Guarantee Foundation

Abbreviations

7

2 Major Activities I Overview

26th Annual Conference November 2013 (Busan Korea)

4

3 Performance of Member Countries I Overview

Classification Total Guarantee Supplies

Outstanding Guarantees

No of SME-Beneficiaries

Japan 113557 373609 1500067

Korea 62457 72004 1117568

Taiwan 31436 21047 126864

Indonesia 7425 9282 3782098

Malaysia 873 3742 48759

Thailand 1634 3523 43528

India 2819 No Records 254000

Sri Lanka 32 No Records 2307

Nepal 7 No Records 12727

Philippines 1 14 465

Total 220241 483208 6888383

(Unit million USD number)

Japan Korea Taiwan as of the end of 2012 Others as of the end of 2011

5

Credit Guarantee Schemes of Major Members

1 Korea II Credit Guarantee Schemes of Members

Contribution

Local Gov

National Government

Banks Contribution

Counter- guarantee

SMEs

Loan

KOTEC

16 CGFs

KODIT Credit Guarantee

KODIT Korea Credit Guarantee Fund KOTEC Korea Technology Finance Corporation KOREG Korea Federation of Credit Guarantee Foundations CGF Credit Guarantee Foundation

Abbreviations

7

3 Performance of Member Countries I Overview

Classification Total Guarantee Supplies

Outstanding Guarantees

No of SME-Beneficiaries

Japan 113557 373609 1500067

Korea 62457 72004 1117568

Taiwan 31436 21047 126864

Indonesia 7425 9282 3782098

Malaysia 873 3742 48759

Thailand 1634 3523 43528

India 2819 No Records 254000

Sri Lanka 32 No Records 2307

Nepal 7 No Records 12727

Philippines 1 14 465

Total 220241 483208 6888383

(Unit million USD number)

Japan Korea Taiwan as of the end of 2012 Others as of the end of 2011

5

Credit Guarantee Schemes of Major Members

1 Korea II Credit Guarantee Schemes of Members

Contribution

Local Gov

National Government

Banks Contribution

Counter- guarantee

SMEs

Loan

KOTEC

16 CGFs

KODIT Credit Guarantee

KODIT Korea Credit Guarantee Fund KOTEC Korea Technology Finance Corporation KOREG Korea Federation of Credit Guarantee Foundations CGF Credit Guarantee Foundation

Abbreviations

7

Credit Guarantee Schemes of Major Members

1 Korea II Credit Guarantee Schemes of Members

Contribution

Local Gov

National Government

Banks Contribution

Counter- guarantee

SMEs

Loan

KOTEC

16 CGFs

KODIT Credit Guarantee

KODIT Korea Credit Guarantee Fund KOTEC Korea Technology Finance Corporation KOREG Korea Federation of Credit Guarantee Foundations CGF Credit Guarantee Foundation

Abbreviations

7

1 Korea II Credit Guarantee Schemes of Members

Contribution

Local Gov

National Government

Banks Contribution

Counter- guarantee

SMEs

Loan

KOTEC

16 CGFs

KODIT Credit Guarantee

KODIT Korea Credit Guarantee Fund KOTEC Korea Technology Finance Corporation KOREG Korea Federation of Credit Guarantee Foundations CGF Credit Guarantee Foundation

Abbreviations

7

1 Korea II Credit Guarantee Schemes of Members

Institutions Target

Business Sources of Fund Market share

KODIT (1976~ )

General

① Central Government

② Banks (0225)

③ Enterprises

56

KOTEC (1989~ )

Tech-Oriented Venture

① Central Government

② Banks (0135)

③ Enterprises

25

16 CGFs (1999~ )

Small amp Micro

① Local Government

② Banks (002)

③ Central Government

19

Market share by general guarantee outstanding

8

2 Japan II Credit Guarantee Schemes of Members

SMEs

Banks 52 Local CGCs

Local Government

National Government

Contribution

Credit Guarantee

Fund Loan

Insurance

Subsidy

Compensation for the Loss

JFC Japan Finance Corporation CGCs Credit Guarantee Corporations JFG Japan Federation of Credit Guarantee Corporations

Abbreviations

9

2 Japan II Credit Guarantee Schemes of Members

Two-tier Credit Supplement System

Characteristics of Credit Insurance System

10

3 Taiwan II Credit Guarantee Schemes of Members

Taiwan SMEG Small and Medium Enterprise Credit Guarantee Fund of Taiwan

Abbreviation

Contribution

Loan

Government SMEs

Banks

11

3 Taiwan II Credit Guarantee Schemes of Members

Indirect Guarantee (84) Package Guarantee (15) Direct Guarantee (1)

1) Applying for loan 1) Agreement for Credit Line 1) Applying for credit guarantee

2) Investigation amp Appraisal 2) Applying for loan 2) Investigation amp Appraisal

3) Issuing Letter of Guarantee 3) Investigation amp Appraisal 3) Applying for loan

4) Confirming credit guarantee 4) Extending loan

Banks

SMEG

SMEs

Banks

SMEG

SMEs

Banks

SMEs

SMEG

( ) share of each program

12

4 Outreach of Credit Guarantee II Credit Guarantee Schemes of Members

Korea and Japan are countries with the highest outstanding guarantee to GDP ratios in the world while taking actively counter-cyclical financial policy in times of recession

59 56

51 48

46 48

63 59

56 55

63 60

57 58 57

68

76 73 74

67

19

26

33 34

29 26

32 36

40 43

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Japan

Korea

Guarantee to GDP (2011) USA 06 Germany 02

Taiwan

13

2 Japan II Credit Guarantee Schemes of Members

SMEs

Banks 52 Local CGCs

Local Government

National Government

Contribution

Credit Guarantee

Fund Loan

Insurance

Subsidy

Compensation for the Loss

JFC Japan Finance Corporation CGCs Credit Guarantee Corporations JFG Japan Federation of Credit Guarantee Corporations

Abbreviations

9

2 Japan II Credit Guarantee Schemes of Members

Two-tier Credit Supplement System

Characteristics of Credit Insurance System

10

3 Taiwan II Credit Guarantee Schemes of Members

Taiwan SMEG Small and Medium Enterprise Credit Guarantee Fund of Taiwan

Abbreviation

Contribution

Loan

Government SMEs

Banks

11

3 Taiwan II Credit Guarantee Schemes of Members

Indirect Guarantee (84) Package Guarantee (15) Direct Guarantee (1)

1) Applying for loan 1) Agreement for Credit Line 1) Applying for credit guarantee

2) Investigation amp Appraisal 2) Applying for loan 2) Investigation amp Appraisal

3) Issuing Letter of Guarantee 3) Investigation amp Appraisal 3) Applying for loan

4) Confirming credit guarantee 4) Extending loan

Banks

SMEG

SMEs

Banks

SMEG

SMEs

Banks

SMEs

SMEG

( ) share of each program

12

4 Outreach of Credit Guarantee II Credit Guarantee Schemes of Members

Korea and Japan are countries with the highest outstanding guarantee to GDP ratios in the world while taking actively counter-cyclical financial policy in times of recession

59 56

51 48

46 48

63 59

56 55

63 60

57 58 57

68

76 73 74

67

19

26

33 34

29 26

32 36

40 43

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Japan

Korea

Guarantee to GDP (2011) USA 06 Germany 02

Taiwan

13

2 Japan II Credit Guarantee Schemes of Members

Two-tier Credit Supplement System

Characteristics of Credit Insurance System

10

3 Taiwan II Credit Guarantee Schemes of Members

Taiwan SMEG Small and Medium Enterprise Credit Guarantee Fund of Taiwan

Abbreviation

Contribution

Loan

Government SMEs

Banks

11

3 Taiwan II Credit Guarantee Schemes of Members

Indirect Guarantee (84) Package Guarantee (15) Direct Guarantee (1)

1) Applying for loan 1) Agreement for Credit Line 1) Applying for credit guarantee

2) Investigation amp Appraisal 2) Applying for loan 2) Investigation amp Appraisal

3) Issuing Letter of Guarantee 3) Investigation amp Appraisal 3) Applying for loan

4) Confirming credit guarantee 4) Extending loan

Banks

SMEG

SMEs

Banks

SMEG

SMEs

Banks

SMEs

SMEG

( ) share of each program

12

4 Outreach of Credit Guarantee II Credit Guarantee Schemes of Members

Korea and Japan are countries with the highest outstanding guarantee to GDP ratios in the world while taking actively counter-cyclical financial policy in times of recession

59 56

51 48

46 48

63 59

56 55

63 60

57 58 57

68

76 73 74

67

19

26

33 34

29 26

32 36

40 43

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Japan

Korea

Guarantee to GDP (2011) USA 06 Germany 02

Taiwan

13

3 Taiwan II Credit Guarantee Schemes of Members

Taiwan SMEG Small and Medium Enterprise Credit Guarantee Fund of Taiwan

Abbreviation

Contribution

Loan

Government SMEs

Banks

11

3 Taiwan II Credit Guarantee Schemes of Members

Indirect Guarantee (84) Package Guarantee (15) Direct Guarantee (1)

1) Applying for loan 1) Agreement for Credit Line 1) Applying for credit guarantee

2) Investigation amp Appraisal 2) Applying for loan 2) Investigation amp Appraisal

3) Issuing Letter of Guarantee 3) Investigation amp Appraisal 3) Applying for loan

4) Confirming credit guarantee 4) Extending loan

Banks

SMEG

SMEs

Banks

SMEG

SMEs

Banks

SMEs

SMEG

( ) share of each program

12

4 Outreach of Credit Guarantee II Credit Guarantee Schemes of Members

Korea and Japan are countries with the highest outstanding guarantee to GDP ratios in the world while taking actively counter-cyclical financial policy in times of recession

59 56

51 48

46 48

63 59

56 55

63 60

57 58 57

68

76 73 74

67

19

26

33 34

29 26

32 36

40 43

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Japan

Korea

Guarantee to GDP (2011) USA 06 Germany 02

Taiwan

13

3 Taiwan II Credit Guarantee Schemes of Members

Indirect Guarantee (84) Package Guarantee (15) Direct Guarantee (1)

1) Applying for loan 1) Agreement for Credit Line 1) Applying for credit guarantee

2) Investigation amp Appraisal 2) Applying for loan 2) Investigation amp Appraisal

3) Issuing Letter of Guarantee 3) Investigation amp Appraisal 3) Applying for loan

4) Confirming credit guarantee 4) Extending loan

Banks

SMEG

SMEs

Banks

SMEG

SMEs

Banks

SMEs

SMEG

( ) share of each program

12

4 Outreach of Credit Guarantee II Credit Guarantee Schemes of Members

Korea and Japan are countries with the highest outstanding guarantee to GDP ratios in the world while taking actively counter-cyclical financial policy in times of recession

59 56

51 48

46 48

63 59

56 55

63 60

57 58 57

68

76 73 74

67

19

26

33 34

29 26

32 36

40 43

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Japan

Korea

Guarantee to GDP (2011) USA 06 Germany 02

Taiwan

13

4 Outreach of Credit Guarantee II Credit Guarantee Schemes of Members

Korea and Japan are countries with the highest outstanding guarantee to GDP ratios in the world while taking actively counter-cyclical financial policy in times of recession

59 56

51 48

46 48

63 59

56 55

63 60

57 58 57

68

76 73 74

67

19

26

33 34

29 26

32 36

40 43

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Japan

Korea

Guarantee to GDP (2011) USA 06 Germany 02

Taiwan

13

Introduction to KODIT

1 Profile of KODIT III Introduction to KODIT

Status Non-profit Special Legal Entity backed by Government

Establishment 1976 (37 years of history)

Capital Fund USD 57 billion (2012)

Outstanding Guarantee USD 424 billion (2012)

No of customers 230000

No of Employees 2200

Business Network 1 Head office 9 Regional HQs 99 Branches

15

2 Business Line-up III Introduction to KODIT

Infrastructure Credit Guarantee

Credit Guarantee

Credit Insurance

Consulting

Management consulting for Startups and SMEs

Guarantee for liability of promising SMEs

Insurance for SMEs account receivables

Guarantee for private investment on SOC construction

16

3 Governance III Introduction to KODIT

Financial Services Commission

Ministry of Strategy amp Finance

Small amp Medium Business Administration

Budget Planning Capital

Contribution Supervision of

Operation

Board of Policy

Chairman amp CEO

17

4 Sources of Fund III Introduction to KODIT

(1) The capital fund of KODIT shall be built up with resources falling under the

following subparagraphs

1 Contributions from the government

2 Contributions from financial institutions

3 Contributions from enterprises

helliphelliphelliphelliphelliphellip

(3) Financial institutions shall make contributions to KODIT such amount by the

rate as prescribed in the Ordinance of the Prime Ministry within the scope

of not exceeding 31000 per annum of their loans

Current Basic Rate of Banks 0225 (KODIT)

18

4 Sources of Fund III Introduction to KODIT

(Unit million USD)

Accumulated Contribution to KODIT Gov (505) Banks (491) Others (04)

2007 2008 2009 2010 2011 2012

6039 6758 7516 8255 8997 9794

8516 8603 10452 10452 10452 10077 8

19

29 30 68 86

Banks Government Corporations

19

4 Sources of Fund III Introduction to KODIT

20

4 Sources of Fund III Introduction to KODIT

21

(Spread + Subrogation) ndash (Loan loss + Contribution)

Benefits to Costs ratio = 26 rarrldquoefficientrdquo

5 Enterprises Evaluation System III Introduction to KODIT

Comprehensive Evaluation

System

Analyst s Judgment

Corporate Credit Rating System (CCRS)

rarr Measuring Default Risks through Probability of Default (PD)

Credit Rating

KODIT Valuation System (KOVAS) rarr Measuring Future Growth Potential of Enterprises

Firm Value

22

5 Enterprises Evaluation System III Introduction to KODIT

Rating Probability of Default

KR1

KR2

KR3

hellip

KR7

KR8

KR9

hellip

KR13

KR14

KR15

056

074

097

hellip

292

385

507

hellip

1524

2007

2644

Qualitative Factor

Total Score

Pre-Rating

Final Rating

Financial Factor

CEOs Financial Records

Business Experience etc

Quantitative Factor

Filtering

Financial Ratio

Analysis

Industry Grade

Technology Level etc

(UNIT)

23

5 Enterprises Evaluation System III Introduction to KODIT

Estimate sales amp

net operating profit

(adjusted by credit analyst)

Estimate cost of capital

(discount rate)

Estimate excess profit

amp continuing value

(time horizon 7 years)

Firm Value Grade 1~9

External factor industry CEO location etc Internal factor sales net operating profit invested capital etc

Input 20 elements affecting firm value

Checking abnormal financial indicators

Firm Value (FV)

24

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

1 Profile of KODIT III Introduction to KODIT

Status Non-profit Special Legal Entity backed by Government

Establishment 1976 (37 years of history)

Capital Fund USD 57 billion (2012)

Outstanding Guarantee USD 424 billion (2012)

No of customers 230000

No of Employees 2200

Business Network 1 Head office 9 Regional HQs 99 Branches

15

2 Business Line-up III Introduction to KODIT

Infrastructure Credit Guarantee

Credit Guarantee

Credit Insurance

Consulting

Management consulting for Startups and SMEs

Guarantee for liability of promising SMEs

Insurance for SMEs account receivables

Guarantee for private investment on SOC construction

16

3 Governance III Introduction to KODIT

Financial Services Commission

Ministry of Strategy amp Finance

Small amp Medium Business Administration

Budget Planning Capital

Contribution Supervision of

Operation

Board of Policy

Chairman amp CEO

17

4 Sources of Fund III Introduction to KODIT

(1) The capital fund of KODIT shall be built up with resources falling under the

following subparagraphs

1 Contributions from the government

2 Contributions from financial institutions

3 Contributions from enterprises

helliphelliphelliphelliphelliphellip

(3) Financial institutions shall make contributions to KODIT such amount by the

rate as prescribed in the Ordinance of the Prime Ministry within the scope

of not exceeding 31000 per annum of their loans

Current Basic Rate of Banks 0225 (KODIT)

18

4 Sources of Fund III Introduction to KODIT

(Unit million USD)

Accumulated Contribution to KODIT Gov (505) Banks (491) Others (04)

2007 2008 2009 2010 2011 2012

6039 6758 7516 8255 8997 9794

8516 8603 10452 10452 10452 10077 8

19

29 30 68 86

Banks Government Corporations

19

4 Sources of Fund III Introduction to KODIT

20

4 Sources of Fund III Introduction to KODIT

21

(Spread + Subrogation) ndash (Loan loss + Contribution)

Benefits to Costs ratio = 26 rarrldquoefficientrdquo

5 Enterprises Evaluation System III Introduction to KODIT

Comprehensive Evaluation

System

Analyst s Judgment

Corporate Credit Rating System (CCRS)

rarr Measuring Default Risks through Probability of Default (PD)

Credit Rating

KODIT Valuation System (KOVAS) rarr Measuring Future Growth Potential of Enterprises

Firm Value

22

5 Enterprises Evaluation System III Introduction to KODIT

Rating Probability of Default

KR1

KR2

KR3

hellip

KR7

KR8

KR9

hellip

KR13

KR14

KR15

056

074

097

hellip

292

385

507

hellip

1524

2007

2644

Qualitative Factor

Total Score

Pre-Rating

Final Rating

Financial Factor

CEOs Financial Records

Business Experience etc

Quantitative Factor

Filtering

Financial Ratio

Analysis

Industry Grade

Technology Level etc

(UNIT)

23

5 Enterprises Evaluation System III Introduction to KODIT

Estimate sales amp

net operating profit

(adjusted by credit analyst)

Estimate cost of capital

(discount rate)

Estimate excess profit

amp continuing value

(time horizon 7 years)

Firm Value Grade 1~9

External factor industry CEO location etc Internal factor sales net operating profit invested capital etc

Input 20 elements affecting firm value

Checking abnormal financial indicators

Firm Value (FV)

24

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

2 Business Line-up III Introduction to KODIT

Infrastructure Credit Guarantee

Credit Guarantee

Credit Insurance

Consulting

Management consulting for Startups and SMEs

Guarantee for liability of promising SMEs

Insurance for SMEs account receivables

Guarantee for private investment on SOC construction

16

3 Governance III Introduction to KODIT

Financial Services Commission

Ministry of Strategy amp Finance

Small amp Medium Business Administration

Budget Planning Capital

Contribution Supervision of

Operation

Board of Policy

Chairman amp CEO

17

4 Sources of Fund III Introduction to KODIT

(1) The capital fund of KODIT shall be built up with resources falling under the

following subparagraphs

1 Contributions from the government

2 Contributions from financial institutions

3 Contributions from enterprises

helliphelliphelliphelliphelliphellip

(3) Financial institutions shall make contributions to KODIT such amount by the

rate as prescribed in the Ordinance of the Prime Ministry within the scope

of not exceeding 31000 per annum of their loans

Current Basic Rate of Banks 0225 (KODIT)

18

4 Sources of Fund III Introduction to KODIT

(Unit million USD)

Accumulated Contribution to KODIT Gov (505) Banks (491) Others (04)

2007 2008 2009 2010 2011 2012

6039 6758 7516 8255 8997 9794

8516 8603 10452 10452 10452 10077 8

19

29 30 68 86

Banks Government Corporations

19

4 Sources of Fund III Introduction to KODIT

20

4 Sources of Fund III Introduction to KODIT

21

(Spread + Subrogation) ndash (Loan loss + Contribution)

Benefits to Costs ratio = 26 rarrldquoefficientrdquo

5 Enterprises Evaluation System III Introduction to KODIT

Comprehensive Evaluation

System

Analyst s Judgment

Corporate Credit Rating System (CCRS)

rarr Measuring Default Risks through Probability of Default (PD)

Credit Rating

KODIT Valuation System (KOVAS) rarr Measuring Future Growth Potential of Enterprises

Firm Value

22

5 Enterprises Evaluation System III Introduction to KODIT

Rating Probability of Default

KR1

KR2

KR3

hellip

KR7

KR8

KR9

hellip

KR13

KR14

KR15

056

074

097

hellip

292

385

507

hellip

1524

2007

2644

Qualitative Factor

Total Score

Pre-Rating

Final Rating

Financial Factor

CEOs Financial Records

Business Experience etc

Quantitative Factor

Filtering

Financial Ratio

Analysis

Industry Grade

Technology Level etc

(UNIT)

23

5 Enterprises Evaluation System III Introduction to KODIT

Estimate sales amp

net operating profit

(adjusted by credit analyst)

Estimate cost of capital

(discount rate)

Estimate excess profit

amp continuing value

(time horizon 7 years)

Firm Value Grade 1~9

External factor industry CEO location etc Internal factor sales net operating profit invested capital etc

Input 20 elements affecting firm value

Checking abnormal financial indicators

Firm Value (FV)

24

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

3 Governance III Introduction to KODIT

Financial Services Commission

Ministry of Strategy amp Finance

Small amp Medium Business Administration

Budget Planning Capital

Contribution Supervision of

Operation

Board of Policy

Chairman amp CEO

17

4 Sources of Fund III Introduction to KODIT

(1) The capital fund of KODIT shall be built up with resources falling under the

following subparagraphs

1 Contributions from the government

2 Contributions from financial institutions

3 Contributions from enterprises

helliphelliphelliphelliphelliphellip

(3) Financial institutions shall make contributions to KODIT such amount by the

rate as prescribed in the Ordinance of the Prime Ministry within the scope

of not exceeding 31000 per annum of their loans

Current Basic Rate of Banks 0225 (KODIT)

18

4 Sources of Fund III Introduction to KODIT

(Unit million USD)

Accumulated Contribution to KODIT Gov (505) Banks (491) Others (04)

2007 2008 2009 2010 2011 2012

6039 6758 7516 8255 8997 9794

8516 8603 10452 10452 10452 10077 8

19

29 30 68 86

Banks Government Corporations

19

4 Sources of Fund III Introduction to KODIT

20

4 Sources of Fund III Introduction to KODIT

21

(Spread + Subrogation) ndash (Loan loss + Contribution)

Benefits to Costs ratio = 26 rarrldquoefficientrdquo

5 Enterprises Evaluation System III Introduction to KODIT

Comprehensive Evaluation

System

Analyst s Judgment

Corporate Credit Rating System (CCRS)

rarr Measuring Default Risks through Probability of Default (PD)

Credit Rating

KODIT Valuation System (KOVAS) rarr Measuring Future Growth Potential of Enterprises

Firm Value

22

5 Enterprises Evaluation System III Introduction to KODIT

Rating Probability of Default

KR1

KR2

KR3

hellip

KR7

KR8

KR9

hellip

KR13

KR14

KR15

056

074

097

hellip

292

385

507

hellip

1524

2007

2644

Qualitative Factor

Total Score

Pre-Rating

Final Rating

Financial Factor

CEOs Financial Records

Business Experience etc

Quantitative Factor

Filtering

Financial Ratio

Analysis

Industry Grade

Technology Level etc

(UNIT)

23

5 Enterprises Evaluation System III Introduction to KODIT

Estimate sales amp

net operating profit

(adjusted by credit analyst)

Estimate cost of capital

(discount rate)

Estimate excess profit

amp continuing value

(time horizon 7 years)

Firm Value Grade 1~9

External factor industry CEO location etc Internal factor sales net operating profit invested capital etc

Input 20 elements affecting firm value

Checking abnormal financial indicators

Firm Value (FV)

24

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

4 Sources of Fund III Introduction to KODIT

(1) The capital fund of KODIT shall be built up with resources falling under the

following subparagraphs

1 Contributions from the government

2 Contributions from financial institutions

3 Contributions from enterprises

helliphelliphelliphelliphelliphellip

(3) Financial institutions shall make contributions to KODIT such amount by the

rate as prescribed in the Ordinance of the Prime Ministry within the scope

of not exceeding 31000 per annum of their loans

Current Basic Rate of Banks 0225 (KODIT)

18

4 Sources of Fund III Introduction to KODIT

(Unit million USD)

Accumulated Contribution to KODIT Gov (505) Banks (491) Others (04)

2007 2008 2009 2010 2011 2012

6039 6758 7516 8255 8997 9794

8516 8603 10452 10452 10452 10077 8

19

29 30 68 86

Banks Government Corporations

19

4 Sources of Fund III Introduction to KODIT

20

4 Sources of Fund III Introduction to KODIT

21

(Spread + Subrogation) ndash (Loan loss + Contribution)

Benefits to Costs ratio = 26 rarrldquoefficientrdquo

5 Enterprises Evaluation System III Introduction to KODIT

Comprehensive Evaluation

System

Analyst s Judgment

Corporate Credit Rating System (CCRS)

rarr Measuring Default Risks through Probability of Default (PD)

Credit Rating

KODIT Valuation System (KOVAS) rarr Measuring Future Growth Potential of Enterprises

Firm Value

22

5 Enterprises Evaluation System III Introduction to KODIT

Rating Probability of Default

KR1

KR2

KR3

hellip

KR7

KR8

KR9

hellip

KR13

KR14

KR15

056

074

097

hellip

292

385

507

hellip

1524

2007

2644

Qualitative Factor

Total Score

Pre-Rating

Final Rating

Financial Factor

CEOs Financial Records

Business Experience etc

Quantitative Factor

Filtering

Financial Ratio

Analysis

Industry Grade

Technology Level etc

(UNIT)

23

5 Enterprises Evaluation System III Introduction to KODIT

Estimate sales amp

net operating profit

(adjusted by credit analyst)

Estimate cost of capital

(discount rate)

Estimate excess profit

amp continuing value

(time horizon 7 years)

Firm Value Grade 1~9

External factor industry CEO location etc Internal factor sales net operating profit invested capital etc

Input 20 elements affecting firm value

Checking abnormal financial indicators

Firm Value (FV)

24

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

4 Sources of Fund III Introduction to KODIT

(Unit million USD)

Accumulated Contribution to KODIT Gov (505) Banks (491) Others (04)

2007 2008 2009 2010 2011 2012

6039 6758 7516 8255 8997 9794

8516 8603 10452 10452 10452 10077 8

19

29 30 68 86

Banks Government Corporations

19

4 Sources of Fund III Introduction to KODIT

20

4 Sources of Fund III Introduction to KODIT

21

(Spread + Subrogation) ndash (Loan loss + Contribution)

Benefits to Costs ratio = 26 rarrldquoefficientrdquo

5 Enterprises Evaluation System III Introduction to KODIT

Comprehensive Evaluation

System

Analyst s Judgment

Corporate Credit Rating System (CCRS)

rarr Measuring Default Risks through Probability of Default (PD)

Credit Rating

KODIT Valuation System (KOVAS) rarr Measuring Future Growth Potential of Enterprises

Firm Value

22

5 Enterprises Evaluation System III Introduction to KODIT

Rating Probability of Default

KR1

KR2

KR3

hellip

KR7

KR8

KR9

hellip

KR13

KR14

KR15

056

074

097

hellip

292

385

507

hellip

1524

2007

2644

Qualitative Factor

Total Score

Pre-Rating

Final Rating

Financial Factor

CEOs Financial Records

Business Experience etc

Quantitative Factor

Filtering

Financial Ratio

Analysis

Industry Grade

Technology Level etc

(UNIT)

23

5 Enterprises Evaluation System III Introduction to KODIT

Estimate sales amp

net operating profit

(adjusted by credit analyst)

Estimate cost of capital

(discount rate)

Estimate excess profit

amp continuing value

(time horizon 7 years)

Firm Value Grade 1~9

External factor industry CEO location etc Internal factor sales net operating profit invested capital etc

Input 20 elements affecting firm value

Checking abnormal financial indicators

Firm Value (FV)

24

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

4 Sources of Fund III Introduction to KODIT

20

4 Sources of Fund III Introduction to KODIT

21

(Spread + Subrogation) ndash (Loan loss + Contribution)

Benefits to Costs ratio = 26 rarrldquoefficientrdquo

5 Enterprises Evaluation System III Introduction to KODIT

Comprehensive Evaluation

System

Analyst s Judgment

Corporate Credit Rating System (CCRS)

rarr Measuring Default Risks through Probability of Default (PD)

Credit Rating

KODIT Valuation System (KOVAS) rarr Measuring Future Growth Potential of Enterprises

Firm Value

22

5 Enterprises Evaluation System III Introduction to KODIT

Rating Probability of Default

KR1

KR2

KR3

hellip

KR7

KR8

KR9

hellip

KR13

KR14

KR15

056

074

097

hellip

292

385

507

hellip

1524

2007

2644

Qualitative Factor

Total Score

Pre-Rating

Final Rating

Financial Factor

CEOs Financial Records

Business Experience etc

Quantitative Factor

Filtering

Financial Ratio

Analysis

Industry Grade

Technology Level etc

(UNIT)

23

5 Enterprises Evaluation System III Introduction to KODIT

Estimate sales amp

net operating profit

(adjusted by credit analyst)

Estimate cost of capital

(discount rate)

Estimate excess profit

amp continuing value

(time horizon 7 years)

Firm Value Grade 1~9

External factor industry CEO location etc Internal factor sales net operating profit invested capital etc

Input 20 elements affecting firm value

Checking abnormal financial indicators

Firm Value (FV)

24

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

4 Sources of Fund III Introduction to KODIT

21

(Spread + Subrogation) ndash (Loan loss + Contribution)

Benefits to Costs ratio = 26 rarrldquoefficientrdquo

5 Enterprises Evaluation System III Introduction to KODIT

Comprehensive Evaluation

System

Analyst s Judgment

Corporate Credit Rating System (CCRS)

rarr Measuring Default Risks through Probability of Default (PD)

Credit Rating

KODIT Valuation System (KOVAS) rarr Measuring Future Growth Potential of Enterprises

Firm Value

22

5 Enterprises Evaluation System III Introduction to KODIT

Rating Probability of Default

KR1

KR2

KR3

hellip

KR7

KR8

KR9

hellip

KR13

KR14

KR15

056

074

097

hellip

292

385

507

hellip

1524

2007

2644

Qualitative Factor

Total Score

Pre-Rating

Final Rating

Financial Factor

CEOs Financial Records

Business Experience etc

Quantitative Factor

Filtering

Financial Ratio

Analysis

Industry Grade

Technology Level etc

(UNIT)

23

5 Enterprises Evaluation System III Introduction to KODIT

Estimate sales amp

net operating profit

(adjusted by credit analyst)

Estimate cost of capital

(discount rate)

Estimate excess profit

amp continuing value

(time horizon 7 years)

Firm Value Grade 1~9

External factor industry CEO location etc Internal factor sales net operating profit invested capital etc

Input 20 elements affecting firm value

Checking abnormal financial indicators

Firm Value (FV)

24

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

5 Enterprises Evaluation System III Introduction to KODIT

Comprehensive Evaluation

System

Analyst s Judgment

Corporate Credit Rating System (CCRS)

rarr Measuring Default Risks through Probability of Default (PD)

Credit Rating

KODIT Valuation System (KOVAS) rarr Measuring Future Growth Potential of Enterprises

Firm Value

22

5 Enterprises Evaluation System III Introduction to KODIT

Rating Probability of Default

KR1

KR2

KR3

hellip

KR7

KR8

KR9

hellip

KR13

KR14

KR15

056

074

097

hellip

292

385

507

hellip

1524

2007

2644

Qualitative Factor

Total Score

Pre-Rating

Final Rating

Financial Factor

CEOs Financial Records

Business Experience etc

Quantitative Factor

Filtering

Financial Ratio

Analysis

Industry Grade

Technology Level etc

(UNIT)

23

5 Enterprises Evaluation System III Introduction to KODIT

Estimate sales amp

net operating profit

(adjusted by credit analyst)

Estimate cost of capital

(discount rate)

Estimate excess profit

amp continuing value

(time horizon 7 years)

Firm Value Grade 1~9

External factor industry CEO location etc Internal factor sales net operating profit invested capital etc

Input 20 elements affecting firm value

Checking abnormal financial indicators

Firm Value (FV)

24

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

5 Enterprises Evaluation System III Introduction to KODIT

Rating Probability of Default

KR1

KR2

KR3

hellip

KR7

KR8

KR9

hellip

KR13

KR14

KR15

056

074

097

hellip

292

385

507

hellip

1524

2007

2644

Qualitative Factor

Total Score

Pre-Rating

Final Rating

Financial Factor

CEOs Financial Records

Business Experience etc

Quantitative Factor

Filtering

Financial Ratio

Analysis

Industry Grade

Technology Level etc

(UNIT)

23

5 Enterprises Evaluation System III Introduction to KODIT

Estimate sales amp

net operating profit

(adjusted by credit analyst)

Estimate cost of capital

(discount rate)

Estimate excess profit

amp continuing value

(time horizon 7 years)

Firm Value Grade 1~9

External factor industry CEO location etc Internal factor sales net operating profit invested capital etc

Input 20 elements affecting firm value

Checking abnormal financial indicators

Firm Value (FV)

24

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

5 Enterprises Evaluation System III Introduction to KODIT

Estimate sales amp

net operating profit

(adjusted by credit analyst)

Estimate cost of capital

(discount rate)

Estimate excess profit

amp continuing value

(time horizon 7 years)

Firm Value Grade 1~9

External factor industry CEO location etc Internal factor sales net operating profit invested capital etc

Input 20 elements affecting firm value

Checking abnormal financial indicators

Firm Value (FV)

24

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

5 Enterprises Evaluation System III Introduction to KODIT

KR1 K3

KR2 K4

KR3 K5

KR4 K6

KR5 K7

KR6 K8

KR7 K9

KR8 K10

KR9 K11

KR10 K12

KR11 K13

KR12 K14

KR13

KR14 K13

KR15

K10 K11 K12 K13

K13

K11 K12 K13 K14

K12 K14K15

K8 K9 K10 K11

K9 K10 K11 K12

K6 K7 K8 K9

K7 K8 K9 K10

K4 K5 K6 K7

K5 K6 K7 K8

K3 K4 K5

K3 K4 K5 K6

FV-6 FV-7 FV-8 FV-9

K2

K3

FV-5

K2 K3 K4

K1

FV-1 FV-2 FV-3 FV-4KOVAS

CCRS

25

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

6 Economic Role of Credit Guarantee III Introduction to KODIT

The Growth Rate of CG The Growth Rate of GDP

CG supplyrarr Invest amp Expansion rarr Employment Increase rarrEconomic Upturn

-20

0

20

40

60

80

100

-5

0

5

10

15

20

25

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

GDP(Nominal) CG Supplied

26

Foreign Currency Crisis

Global Financial Crisis

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

Wrap-up

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

1 Summary IV Wrap-up

(Operating Body) Separate Guarantee Institution Established by the Government amp the Special Law

(Public System) High Reliability amp Open-type Access

(Fund Raising) Raised by the Government Subsidies

and Contribution from Banks as well as the Guarantee Fees from Enterprises

(Economic Role) Major Financial Policy Tool in Times of Recession (Counter-cyclicality)

28

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

2 Closing (Introduction to Korean Wave) IV Wrap-up

29

317 (No1 share) World-class Enterprises 176 bil (hits on YouTube)

Korean gov provides developing countries with non-financial assistance KSP

Under KSP KODIT offers policy consultation regarding credit guarantee system

Beneficiaries

Vietnam(2007) Cambodia(2010) Kazakhstan(2011) Ghana(2012) Mongolia(2013)

Other Beneficiaries Indonesia(2013) Uzbekistan(2012)

Country Institution

Korea (3) Korea Credit Guarantee Fund (KODIT)

Korea Technology Finance Corporation (KOTEC)

Korea Federation of Credit Guarantee Foundations (KOREG)

Japan (2) Japan Finance Corporation (JFC)

Japan Federation of Credit Guarantee Corporations (JFG) consists of 52 CGCs

Taiwan (1) Small and Medium Enterprise Credit Guarantee Fund of Taiwan (Taiwan SMEG)

Thailand (1) Thai Credit Guarantee Corporation (TCG)

Malaysia (1) Credit Guarantee Corporation Malaysia Berhad (CGCMB)

31

Country Institution

Indonesia (3) Perum Jaminan Kredit Indonesia (Perum Jamkrindo)

PT Asuransi Kredit Indonesia (PT Askrindo)

PT Penjamin Kredit Pengusaha Indonesia (PKPI)

India (1) Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

Philippines (1) Small Business Guarantee amp Finance Corporation (SBGFC)

Nepal (1) Deposit amp Credit Guarantee Corporation (DCGC)

Sri Lanka (1) Central Bank of Sri Lanka (CBSL)

1 Observer Papua New Guinea (Small Business Development Corporation)

32

VBR Value

Firm Value

divided by

Book value of equity

Size of Book Value

(Equity)

Less than USD1 million

USD 1 million ~3 million

USD 3 million ~ 10 million

More than USD 10 million

Value

Rating Scales

FV1

FV2

FV8

FV9

Classified under 9 scales according to the VBR scores in each different size of equity capital

VBR Firm Value to Book Value Ratio

33

Definition Details

Excellent bull Continuous abnormal earnings can be achieved due to the brilliant profit-making ability at present and future

bull Excellent future value that is not influenced by the changes in the external environment

Good

bull Demonstrating a stable growth rate and a good future profit-making ability

bull There is a possibility that the firm may get influenced by the unfavorable changes in the

business environment in the long term

Fair

bull Continuous growth is possible if there is no dramatic change in the business environment

bull There is a possibility of the decrease in the firm value due to the decrease in the profitability

in response to the changes in the external environment

Poor bull Growth will be somewhat restricted due to the deterioration in profitability and cash flows if

there is no improvement in the economy and business environment

Very Poor

bull Profit making capacity is expected to be weak at present and future Hence there is a high

possibility that the firm value may decrease upon the business operation

bull Doubtful about the existence of the firm as a going businesses

FV1 FV2 FV3 FV4 FV5 FV6 FV7 FV8 FV9

Score Range 90~100 80~89 70~79 60~69 55~59 50~54 40~49 30~39 0~29

Definition Excellent Good Fair Poor Very Poor

34

Decision-making Matrix Credit rating + Firm Value

High

Average

Low

High Average Low

Firm Value

Credit Rating

Measures Group Credit Rating

Firm Value

Group I

I

II

III

IV

High High

High Low

Low High

Low Low

Priority Support

Selectively Support

(Overestimated)

Actively Support

(Underestimated)

Reject (Cautiously Support)

Group II

Group III Group IV

35

Firm Value

Credit Rating

High (FV6 or higher )

Low (FV7 or lower)

Average Default Rate

High (KR6 or higher)

Group I

( 04 )

Group II

( 38 ) 06

Low (KR7 or lower)

Group III

( 15 )

Group IV

( 77 ) 23

Average Default Rate 06 51 10

Group III(Credit Rating amp Firm Value) Default Rate 15

Group II (Credit Rating amp Firm Value) Default Rate 38

Brackets Default Rate

36

Case Credit Rating Value Rating

Company 1 KR1

(PD is low)

FV5 (Value is middle class

Future Growth possibility normal )

Company 2 KR1

(PD is low)

FV1 (Value is high

Future Growth potential high )

At the same level of PD Better to support the company with higher future growth potential

37

Country Institution

Indonesia (3) Perum Jaminan Kredit Indonesia (Perum Jamkrindo)

PT Asuransi Kredit Indonesia (PT Askrindo)

PT Penjamin Kredit Pengusaha Indonesia (PKPI)

India (1) Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

Philippines (1) Small Business Guarantee amp Finance Corporation (SBGFC)

Nepal (1) Deposit amp Credit Guarantee Corporation (DCGC)

Sri Lanka (1) Central Bank of Sri Lanka (CBSL)

1 Observer Papua New Guinea (Small Business Development Corporation)

32

VBR Value

Firm Value

divided by

Book value of equity

Size of Book Value

(Equity)

Less than USD1 million

USD 1 million ~3 million

USD 3 million ~ 10 million

More than USD 10 million

Value

Rating Scales

FV1

FV2

FV8

FV9

Classified under 9 scales according to the VBR scores in each different size of equity capital

VBR Firm Value to Book Value Ratio

33

Definition Details

Excellent bull Continuous abnormal earnings can be achieved due to the brilliant profit-making ability at present and future

bull Excellent future value that is not influenced by the changes in the external environment

Good

bull Demonstrating a stable growth rate and a good future profit-making ability

bull There is a possibility that the firm may get influenced by the unfavorable changes in the

business environment in the long term

Fair

bull Continuous growth is possible if there is no dramatic change in the business environment

bull There is a possibility of the decrease in the firm value due to the decrease in the profitability

in response to the changes in the external environment

Poor bull Growth will be somewhat restricted due to the deterioration in profitability and cash flows if

there is no improvement in the economy and business environment

Very Poor

bull Profit making capacity is expected to be weak at present and future Hence there is a high

possibility that the firm value may decrease upon the business operation

bull Doubtful about the existence of the firm as a going businesses

FV1 FV2 FV3 FV4 FV5 FV6 FV7 FV8 FV9

Score Range 90~100 80~89 70~79 60~69 55~59 50~54 40~49 30~39 0~29

Definition Excellent Good Fair Poor Very Poor

34

Decision-making Matrix Credit rating + Firm Value

High

Average

Low

High Average Low

Firm Value

Credit Rating

Measures Group Credit Rating

Firm Value

Group I

I

II

III

IV

High High

High Low

Low High

Low Low

Priority Support

Selectively Support

(Overestimated)

Actively Support

(Underestimated)

Reject (Cautiously Support)

Group II

Group III Group IV

35

Firm Value

Credit Rating

High (FV6 or higher )

Low (FV7 or lower)

Average Default Rate

High (KR6 or higher)

Group I

( 04 )

Group II

( 38 ) 06

Low (KR7 or lower)

Group III

( 15 )

Group IV

( 77 ) 23

Average Default Rate 06 51 10

Group III(Credit Rating amp Firm Value) Default Rate 15

Group II (Credit Rating amp Firm Value) Default Rate 38

Brackets Default Rate

36

Case Credit Rating Value Rating

Company 1 KR1

(PD is low)

FV5 (Value is middle class

Future Growth possibility normal )

Company 2 KR1

(PD is low)

FV1 (Value is high

Future Growth potential high )

At the same level of PD Better to support the company with higher future growth potential

37

VBR Value

Firm Value

divided by

Book value of equity

Size of Book Value

(Equity)

Less than USD1 million

USD 1 million ~3 million

USD 3 million ~ 10 million

More than USD 10 million

Value

Rating Scales

FV1

FV2

FV8

FV9

Classified under 9 scales according to the VBR scores in each different size of equity capital

VBR Firm Value to Book Value Ratio

33

Definition Details

Excellent bull Continuous abnormal earnings can be achieved due to the brilliant profit-making ability at present and future

bull Excellent future value that is not influenced by the changes in the external environment

Good

bull Demonstrating a stable growth rate and a good future profit-making ability

bull There is a possibility that the firm may get influenced by the unfavorable changes in the

business environment in the long term

Fair

bull Continuous growth is possible if there is no dramatic change in the business environment

bull There is a possibility of the decrease in the firm value due to the decrease in the profitability

in response to the changes in the external environment

Poor bull Growth will be somewhat restricted due to the deterioration in profitability and cash flows if

there is no improvement in the economy and business environment

Very Poor

bull Profit making capacity is expected to be weak at present and future Hence there is a high

possibility that the firm value may decrease upon the business operation

bull Doubtful about the existence of the firm as a going businesses

FV1 FV2 FV3 FV4 FV5 FV6 FV7 FV8 FV9

Score Range 90~100 80~89 70~79 60~69 55~59 50~54 40~49 30~39 0~29

Definition Excellent Good Fair Poor Very Poor

34

Decision-making Matrix Credit rating + Firm Value

High

Average

Low

High Average Low

Firm Value

Credit Rating

Measures Group Credit Rating

Firm Value

Group I

I

II

III

IV

High High

High Low

Low High

Low Low

Priority Support

Selectively Support

(Overestimated)

Actively Support

(Underestimated)

Reject (Cautiously Support)

Group II

Group III Group IV

35

Firm Value

Credit Rating

High (FV6 or higher )

Low (FV7 or lower)

Average Default Rate

High (KR6 or higher)

Group I

( 04 )

Group II

( 38 ) 06

Low (KR7 or lower)

Group III

( 15 )

Group IV

( 77 ) 23

Average Default Rate 06 51 10

Group III(Credit Rating amp Firm Value) Default Rate 15

Group II (Credit Rating amp Firm Value) Default Rate 38

Brackets Default Rate

36

Case Credit Rating Value Rating

Company 1 KR1

(PD is low)

FV5 (Value is middle class

Future Growth possibility normal )

Company 2 KR1

(PD is low)

FV1 (Value is high

Future Growth potential high )

At the same level of PD Better to support the company with higher future growth potential

37

Definition Details

Excellent bull Continuous abnormal earnings can be achieved due to the brilliant profit-making ability at present and future

bull Excellent future value that is not influenced by the changes in the external environment

Good

bull Demonstrating a stable growth rate and a good future profit-making ability

bull There is a possibility that the firm may get influenced by the unfavorable changes in the

business environment in the long term

Fair

bull Continuous growth is possible if there is no dramatic change in the business environment

bull There is a possibility of the decrease in the firm value due to the decrease in the profitability

in response to the changes in the external environment

Poor bull Growth will be somewhat restricted due to the deterioration in profitability and cash flows if

there is no improvement in the economy and business environment

Very Poor

bull Profit making capacity is expected to be weak at present and future Hence there is a high

possibility that the firm value may decrease upon the business operation

bull Doubtful about the existence of the firm as a going businesses

FV1 FV2 FV3 FV4 FV5 FV6 FV7 FV8 FV9

Score Range 90~100 80~89 70~79 60~69 55~59 50~54 40~49 30~39 0~29

Definition Excellent Good Fair Poor Very Poor

34

Decision-making Matrix Credit rating + Firm Value

High

Average

Low

High Average Low

Firm Value

Credit Rating

Measures Group Credit Rating

Firm Value

Group I

I

II

III

IV

High High

High Low

Low High

Low Low

Priority Support

Selectively Support

(Overestimated)

Actively Support

(Underestimated)

Reject (Cautiously Support)

Group II

Group III Group IV

35

Firm Value

Credit Rating

High (FV6 or higher )

Low (FV7 or lower)

Average Default Rate

High (KR6 or higher)

Group I

( 04 )

Group II

( 38 ) 06

Low (KR7 or lower)

Group III

( 15 )

Group IV

( 77 ) 23

Average Default Rate 06 51 10

Group III(Credit Rating amp Firm Value) Default Rate 15

Group II (Credit Rating amp Firm Value) Default Rate 38

Brackets Default Rate

36

Case Credit Rating Value Rating

Company 1 KR1

(PD is low)

FV5 (Value is middle class

Future Growth possibility normal )

Company 2 KR1

(PD is low)

FV1 (Value is high

Future Growth potential high )

At the same level of PD Better to support the company with higher future growth potential

37

Decision-making Matrix Credit rating + Firm Value

High

Average

Low

High Average Low

Firm Value

Credit Rating

Measures Group Credit Rating

Firm Value

Group I

I

II

III

IV

High High

High Low

Low High

Low Low

Priority Support

Selectively Support

(Overestimated)

Actively Support

(Underestimated)

Reject (Cautiously Support)

Group II

Group III Group IV

35

Firm Value

Credit Rating

High (FV6 or higher )

Low (FV7 or lower)

Average Default Rate

High (KR6 or higher)

Group I

( 04 )

Group II

( 38 ) 06

Low (KR7 or lower)

Group III

( 15 )

Group IV

( 77 ) 23

Average Default Rate 06 51 10

Group III(Credit Rating amp Firm Value) Default Rate 15

Group II (Credit Rating amp Firm Value) Default Rate 38

Brackets Default Rate

36

Case Credit Rating Value Rating

Company 1 KR1

(PD is low)

FV5 (Value is middle class

Future Growth possibility normal )

Company 2 KR1

(PD is low)

FV1 (Value is high

Future Growth potential high )

At the same level of PD Better to support the company with higher future growth potential

37

Firm Value

Credit Rating

High (FV6 or higher )

Low (FV7 or lower)

Average Default Rate

High (KR6 or higher)

Group I

( 04 )

Group II

( 38 ) 06

Low (KR7 or lower)

Group III

( 15 )

Group IV

( 77 ) 23

Average Default Rate 06 51 10

Group III(Credit Rating amp Firm Value) Default Rate 15

Group II (Credit Rating amp Firm Value) Default Rate 38

Brackets Default Rate

36

Case Credit Rating Value Rating

Company 1 KR1

(PD is low)

FV5 (Value is middle class

Future Growth possibility normal )

Company 2 KR1

(PD is low)

FV1 (Value is high

Future Growth potential high )

At the same level of PD Better to support the company with higher future growth potential

37

Case Credit Rating Value Rating

Company 1 KR1

(PD is low)

FV5 (Value is middle class

Future Growth possibility normal )

Company 2 KR1

(PD is low)

FV1 (Value is high

Future Growth potential high )

At the same level of PD Better to support the company with higher future growth potential

37