Bank Small Loan Delinquency Rate Soars... 7 Times Increase in 3 Years

High Proportion of Internet Banks and 2030 Generation
Assemblywoman Kim Hyunjung Urges Urgent Special Measures

As borrowers' repayment ability deteriorates, the overdue balance of emergency loans has increased sevenfold over the past three years.

According to data 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 25th, the overdue balance of emergency loans as of the end of August at commercial banks (KB Kookmin, Shinhan, Hana, Woori, iM Bank) and internet banks (Kakao Bank, K Bank, Toss Bank) amounted to 47.667 billion KRW.

The total overdue balance of emergency loans across all banks was 5.846 billion KRW at the end of 2021 but surged to 47.667 billion KRW as of August this year. The delinquency rate has increased annually from 0.33% at the end of 2021, 0.59% in 2022, 1.07% last year, to 1.24% at the end of August this year.

As borrowers' repayment ability deteriorated, the overdue balance of emergency loans increased sevenfold over three years. According to data received on the 25th by Kim Hyun-jung, a member of the National Assembly's Financial Services Committee from the Democratic Party of Korea, from the Financial Supervisory Service, the overdue balance of emergency loans as of the end of August at commercial banks (KB Kookmin, Shinhan, Hana, Woori, iM Bank) and internet banks (Kakao Bank, K Bank, Toss Bank) amounted to 47.667 billion KRW.

In particular, internet banks, where loans can be easily obtained non-face-to-face and conditions are not stringent, showed a high level of delinquencies, especially among younger customers. As of the end of August, the overdue balance of emergency loans at the three internet banks was 31.731 billion KRW, accounting for 67% of the total overdue balance. Specifically, Kakao Bank's loan balance and overdue amount were 2.5893 trillion KRW and 27.1 billion KRW, respectively. Toss Bank had 301.9 billion KRW and 2.3 billion KRW, and K Bank had 257.5 billion KRW and 2.1 billion KRW.

The small loan amount and overdue amount (delinquency rate) for the 20s and 30s age group across all banks increased from 1.1711 trillion KRW and 3.869 billion KRW (0.33%) in 2021 to 2.5418 trillion KRW and 30.891 billion KRW (1.21%) in 2024, showing a delinquency increase rate of 698%.

Small loans at banks are products that can be borrowed up to 30 million KRW at medium interest rates. As of the 1st of last month, the interest rates by bank are as follows: KB Kookmin Bank 5.53%?6.65%, Shinhan Bank 5.61%?6.61%, Hana Bank 5.47%?9.68%, iM Bank 8.1%?15%, Kakao Bank 4.81%?15%, K Bank 5.4%?10.06%, Toss Bank 5.24%?15%. Woori Bank discontinued sales in December last year.

Representative Kim said, "The number of people who cannot even repay small loans due to economic difficulties is increasing," adding, "The government must urgently prepare special measures to restore livelihoods and overcome the economic crisis."