Economic Slump Makes Debt Repayment Difficult... Household Loan Delinquency Rate Hits Highest in 6 Months

Financial Supervisory Service: Household Loan Delinquency Rate Hits Six-Month High
Loan Delinquency Rates May Rise Further Amid Sluggish Domestic Economy

As the economic downturn continues, the household loan delinquency rate has reached its highest level in six months. Corporate loan delinquency rates are also rising, particularly among small and medium-sized enterprises.

According to the 'Status of Domestic Banks' Won-denominated Loan Delinquency Rates (Provisional)' data released by the Financial Supervisory Service on the 24th, the delinquency rate for won-denominated loans at domestic banks (based on principal and interest overdue for more than one month) was 0.52% at the end of November last year, up 0.04 percentage points from 0.48% at the end of the previous month.

The new delinquency rate in November was also 0.12%, an increase of 0.01 percentage points from 0.11% in the previous month. The amount of new delinquencies in the same month was 2.8 trillion won, and the amount of delinquent loans resolved was 2 trillion won, both increasing by 300 billion won compared to the previous month.

The won-denominated loan delinquency rate has been rising for two consecutive months, from 0.45% in September last year to 0.48% in October and 0.52% in November. By sector, both corporate and household loan delinquency rates increased, with the household loan delinquency rate rising sharply.

The household loan delinquency rate in November last year was 0.41%, the highest in six months since 0.42% in May. It rose 0.03 percentage points from 0.38% at the end of the previous month. Among household loans, the delinquency rate for mortgage loans was 0.27%, the highest in six months since May. The delinquency rate for household loans excluding mortgage loans (such as credit loans) was 0.82%, the highest in three months since August.

The corporate loan delinquency rate also showed an upward trend. The corporate loan delinquency rate in November last year was 0.60%, the highest since 0.62% in August. The delinquency rate for large corporate loans decreased from 0.04% in the previous month to 0.03%, but the delinquency rate for small and medium-sized enterprise loans rose 0.05 percentage points to 0.75%. Among SMEs, both small corporations and individual business owners saw increases in delinquency rates.

A Financial Supervisory Service official stated, "In November last year, despite an increase in the amount of delinquent loans resolved, new delinquencies increased during the month, causing the loan delinquency rate to rise," and added, "There is a possibility that delinquency rates will continue to rise due to ongoing domestic and external uncertainties and delays in the recovery of the domestic economy."

He continued, "We plan to encourage maintaining sufficient loss absorption capacity by expanding provisions for vulnerable sectors and strengthening asset soundness management through the sale of delinquent and non-performing loans."