Won-denominated Loan Delinquency Rate at 0.48%, Up 0.05%P Year-on-Year
Corporate Delinquency Rate Rises 0.04%P to 0.56%... Household Delinquency Rate Up 0.02%P
"Potential Loss Expansion Centered on Vulnerable Borrowers, Support for Active Self-Debt Restructuring"
The delinquency rate on won-denominated loans at domestic banks as of the end of October rose by 0.03 percentage points (P) compared to the end of the previous month, due to a decrease in the scale of non-performing loan disposals.
Won-denominated Loan Delinquency Rate Trend (January 2013 ~ October 2024) (Source: Financial Supervisory Service)
According to the Financial Supervisory Service on the 13th, the delinquency rate on won-denominated loans at domestic banks was tentatively recorded at 0.48% as of the end of October. This is 0.05%P higher than at the end of October last year. The amount of new delinquencies was 2.5 trillion won, similar to the previous month, but the scale of non-performing loan disposals was 1.7 trillion won, down 2.6 trillion won from the previous month. Accordingly, the new delinquency rate rose by 0.01 percentage points to 0.11% compared to the previous month.
By sector, delinquency rates for both corporate loans and household loans increased. The corporate loan delinquency rate rose by 0.04 percentage points from the end of the previous month to 0.56%, while the household loan delinquency rate increased by 0.02% to 0.65%. The delinquency rate for large corporate loans remained similar at 0.04%, but delinquency rates for small and medium-sized enterprise (SME) loans, small and medium-sized corporate loans, and individual business owner loans rose by 0.05 percentage points, 0.06 percentage points, and 0.04 percentage points respectively. As a result, the delinquency rates for SME loans and small and medium-sized corporate loans again exceeded 0.70%.
Within household loans, the delinquency rate on mortgage loans was 0.25%, similar to the previous month, but household loans excluding mortgage loans, such as unsecured loans, rose by 0.07 percentage points to 0.76% compared to the end of the previous month.
A Financial Supervisory Service official stated, "Although the delinquency rate at domestic banks is still low compared to the long-term average before COVID-19, the loss absorption capacity has greatly improved and is at a sufficiently manageable level," adding, "With the additional base rate cut in November, loan interest rates will gradually decline, easing borrowers' debt repayment burdens." The 10-year average delinquency rate before COVID-19 was 0.78%.
However, as concerns surrounding the financial market are growing, measures will be taken to ensure that loss absorption capacity is maintained. A Financial Supervisory Service official explained, "Due to recent domestic and international uncertainties, credit losses may expand mainly among vulnerable borrowers, so we will support debt burden relief such as activating self-debt restructuring for borrowers at risk of delinquency, and induce sufficient loss absorption capacity through provisions for loan losses."
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