An a bid to improve the governance structure of the NACUFOK, an amendment to the Credit Union Act was made to distribute the rights that used to be concentrated on the Chairman to the Director , Business Operating Division and the Director, Supervisory Division. NACUFOK and primary credit unions became subject to the Korea Housing Finance Corporation Act, in March 2004. Thus, CUs are now allowed to offer long-term (more than 10 years) mortgage loans. Also, an organizational reshuffling was carried out from four regional offices to make twelve regional offices for closer cooperation with the credit unions.
The Credit Union Risk Management System is put into force from May 2004. The system, which is designed to secure the Credit Unions' financial soundness, stability and to allow credit unions achieve stable profits, was finalized in December 2003 after a one-year development process. The currently launched ALM (Asset and Liability Management) System was part of the Risk Management System, focusing on profit maximization and financial stability by setting up a proper level of risks and optimal composition between assets and liabilities. With the ALM system, credit unions will be in a better position to control cash liquidity, interest rate risks and uncertainties by a strengthened capability of predicting changes in the market through simulation analysis. Various management information including statistics will also be provided.
It is particularly noteworthy that the web-based system enables NACUFOK to retrieve information on each credit union's assets, liabilities and processing it to convert it into useful information for primary credit union's liquidity, interest rate risk management. NACUFOK also plans to assist primary credit unions through efficient risk management of supervision and control by setting ceilings for liquidity, interest rate risks. Supervision and control will also be carried out in addition to other supervisory functions, such as instruction on operations of floating money and regular supervision, for overall higher efficiency in risk management.
In May 2004, CSS (the Credit Scoring System) was adopted. The system is designed to check individual loan applicants' credit worthiness based on statistical data to minimize loan risks and provide differentiated service to members with good credit ratings.
Hanareumyeongye Loan, a loan product for members and non-members, was introduced into the market in August 2004. The relevant credit union and NACUFOK jointly work to meet the demand for loans for those whose combined amount of loans has exceeded the designated limit of each primary credit union.
NACUFOK, jointly with ACCU (Association of Asian Confederation of Credit Union), hosted the ACCU Forum and Annual General Meeting, which were held at the Korea Securities Training Institute in Asan city from September 13 through 19. A total of 279 credit union leaders from 27 countries, including U.S., Canada, Germany as well as those from Asian countries attended the event. The Chairman & President of NACUFOK, Dr. Augustine K. Lim was elected as the president of ACCU at the Annual General Meeting.
NACUFOK offers protection of members' shares, deposits, installment deposits and mutual insurance premiums as designated by the Credit Union Depositor Protection Fund. The amount covered is up to 50 million per member. The Fund Management Committee in charge of operating the Fund consists of nine members, including the Chairman whose function shall be to act as the director in charge of inspection and supervision. The Committee includes three persons appointed respectively, by the Finance Minister, Planning Minister and FSC. Those appointed are chosen among the public employees under their respective control, for higher transparency and fair operations of the Fund, with a 3-year term that can be extended up to another term.
NACUFOK collected 500 billion Korean Won for the Fund under the Enforcement Ordinance of the Credit Union Act. Under the Credit Union Act, NACUFOK provides protection for members as detailed in the foregoing, i.e. if a credit union is unable to pay their deposits following bankruptcy or liquidation.
According to the result of the accounting settlement of the credit unions nationwide at the end of 2004, they posted a net profit of 131.7 billion, a 32.4% year-on-year increase, recording profits for three years in a row (89.4 billion won in 2002 and 99.5 billion won in 2003). Looking at their total assets, they posted a 10.4% year-on-year increase (2,003.3 billion won). Deposits increased by 12.6% (or 2,006.2 billion won) year on year.
As a result of an intensive sales promotional campaign following establishment of the electronic banking system, a total of 1.5 million online accounts were made. The number of "financial VAN" members' stores also increased by 145% to 19,132 at the end of 2004 from the end of 2003. NACUFOK also introduced Credit Union-Hyundai Card C, a check card(also known as debit card or a bank card), and Sinhyup-Hyundai Card M equipped with the traffic card function in cooperation with Hyundai Card.
Following promotional activities for the mutual insurance service, the NACUFOK posted 9.45 billion won in premiums earned, which exceeded the annual target by 8%. The result is particularly noteworthy as the market experienced a very difficult situation amid the drawn-out recession of the economy and the overall shrinkage of the business in 2004.
NACUFOK administered joint written exam for the promotion of candidate primary credit union employees was carried out for the first time. It is expected that the exam will pave the way for the credit unions' fair and objective personnel affairs, which in turn will help them enhance their competitiveness through systematic personnel management.