Delinquency Rates Among 20s Rise at 3 Internet Banks... Exceeding 4% at K Bank

Possibility of Using Loans for Cryptocurrency Investment in 20s
Rep. Kim Hyunjung "Excessive Loans May Lead to Serious Financial Risks"

The delinquency rate of customers in their 20s who have borrowed from internet-only banks has recently surged, raising concerns about credit management among young people in their 20s during the economic slowdown. It is analyzed that the delinquency rate among borrowers in their 20s is increasing mainly because young people are easily obtaining unsecured loans from internet banks, where loans can be conveniently accessed online.

According to data related to household unsecured loans from internet-only banks received by Kim Hyun-jung, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, from the Financial Supervisory Service on the 20th, the delinquency rate of borrowers aged 20 or younger who took out unsecured loans from K-Bank as of the end of August this year was 4.05%.

This figure is 0.28 percentage points higher than 3.77% at the end of last year and 2.29 percentage points higher than 1.76% at the end of December 2021, three years ago. Looking at other age groups, as of the end of August, the delinquency rates were in the 1% range for those in their 30s (1.98%), 40s (1.63%), and 50s (1.86%), showing a significant difference compared to those aged 20 or younger.

This trend is also confirmed in other internet banks. As of the end of August, the delinquency rate for unsecured loans among those aged 20 or younger at KakaoBank was 2.09%, more than twice the average across all age groups (1.03%). The delinquency rate for unsecured loans among those aged 20 or younger was 0.45% at the end of 2021, 1.41% at the end of 2022, 1.73% at the end of last year, and has been in the 2% range since July this year (2.00%). At Toss Bank, the delinquency rate for unsecured loans among those aged 20 or younger was 1.75% as of the end of August, up from 1.48% at the end of 2022.

In particular, the fact that K-Bank’s delinquency rate for those in their 20s is more than twice that of other banks is analyzed to be influenced by the high proportion of customers holding linked accounts with the cryptocurrency exchange Upbit. A financial industry official said, "Young cryptocurrency investors in their 20s utilized loans, and as their ability to repay or maintain them diminished, it may have led to delinquencies."

As the delinquency rate among those in their 20s surges, there are calls for thorough loan screening management by internet banks and strict credit management for young people. If young people in their 20s, who are just starting their careers, encounter credit problems, they may face significant disadvantages when using financial sector loans in the future.

Assembly member Kim Hyun-jung emphasized, "While the simple loan procedures and accessibility of internet banks have positive aspects, they also make it easy for young people to take on excessive loans, potentially leading to serious financial risks. It is necessary to manage so that young people do not borrow excessively, and financial authorities should prepare measures such as financial education and counseling services."

Meanwhile, the total delinquent amount of unsecured loans from the three internet banks as of the end of August was 394.4 billion KRW, an increase of about 484% compared to 67.5 billion KRW at the end of 2021, three years ago. The delinquent amount of unsecured loans among those aged 20 or younger increased by about 440%, from 8.2 billion KRW to 44.3 billion KRW during the same period.