Increase in Bank Non-Performing Loan Ratio... Overdue Amount Exceeding 3 Months Reaches 10 Trillion Won

Corporate Loans Totaling 8.3 Trillion Won Account for 82.3% of All Non-Performing Loans

The ratio of non-performing loans (NPLs) at domestic banks is gradually increasing. NPLs refer to loans classified as substandard or below, meaning loans overdue for more than three months among financial institutions' lending. On the 22nd, the Financial Supervisory Service (FSS) announced that as of the end of December last year, the NPL ratio of domestic banks was 0.40%, up 0.02 percentage points from the previous quarter-end (0.38%).

The scale of NPLs reached 10.1 trillion KRW, an increase of 400 billion KRW (4.5%) compared to the previous quarter-end, while total loans decreased (-8.7 trillion KRW), which was the cause. Corporate loans accounted for 8.3 trillion KRW, representing 82.3% of total NPLs.

As of the end of December last year, the loan loss provision coverage ratio was 227.2%, rising 3.3 percentage points from the previous quarter-end (223.9%) due to an increase in provision amounts. It also rose 61.3 percentage points compared to the same period last year (165.9%).

Newly generated NPLs in the fourth quarter amounted to 3 trillion KRW, an increase of 500 billion KRW from the previous quarter (2.5 trillion KRW). New corporate loan NPLs increased by 400 billion KRW to 2.2 trillion KRW compared to the previous quarter, and new household loan NPLs also rose by 100 billion KRW to 700 billion KRW.

The amount of NPLs resolved in the fourth quarter was 2.6 trillion KRW, down 400 billion KRW from the previous quarter (3 trillion KRW).

An FSS official stated, "Although the NPL ratio of domestic banks slightly increased compared to the previous quarter-end, it still maintains a sound level. The loan loss provision coverage ratio also recorded the highest level ever for consecutive quarters due to increased provisions in the fourth quarter."

He added, "Since the balance of NPLs, which had been continuously decreasing, has turned to an upward trend, and delinquency rates also rose in the second half of last year, it is necessary to prepare for the possibility of expanded credit losses in vulnerable corporate and household sectors. We plan to continuously encourage banks to enhance their loss absorption capacity so that they can maintain soundness while smoothly performing their funding supply functions."