Purun Savings Bank saw its net profit reduced by 800 million won for each of two fiscal years after reflecting a 10.4 billion won embezzlement case involving a former executive in its financial statements. The disclosure confirmed that the embezzlement exploited internal control weaknesses in customer deposit withdrawals and loan execution processes.
According to the corrected business report filed by Purun Savings Bank on January 7, net profit for the current year was revised to 7.013 billion won, down 860 million won from the previous figure. Net profit for 2023 was also reduced by 827 million won, from 15.755 billion won to 14.928 billion won.
Loan balances also decreased. The loan balance at the end of 2024 fell by approximately 900 million won, from 913.9 billion won to 913 billion won. Notably, deposit-collateralized loan balances saw the largest decline, dropping from 2.4 billion won to 1.6 billion won. According to the audit report, loan receivables and other receivables were overstated by approximately 800 million won in past financial statements.
The embezzlement was found to have occurred due to inadequate internal controls over customer deposit withdrawals and loan execution. The external auditor stated in the audit report, "The company did not properly design and operate identity verification and approval controls required in the deposit withdrawal and deposit-collateralized loan execution processes," adding, "Due to these internal control deficiencies, embezzlement by an executive occurred, and control procedures to detect such fraudulent transactions in a timely manner were also not operating effectively."
Purun Savings Bank determined that the prospect of recovering the embezzled 10.417 billion won is slim and set aside the full amount as an allowance for bad debts. The bank filed a complaint with investigative authorities against the former executive on December 5 and is pursuing legal procedures including provisional seizure to recover the outstanding amount. The bank has agreed to compensate embezzlement victims a total of 9.655 billion won.
Purun Savings Bank, the only listed company among savings banks, has had its stock trading suspended for over a month since December 3. The Korea Exchange is scheduled to decide by January 13 whether Purun Savings Bank is subject to a substantive review for listing eligibility.
Some investors are calling for management to demonstrate commitment to shareholder returns through measures such as share buybacks and cancellations. A Purun Savings Bank official said, "We are considering measures for our shareholders."