Delinquency Rate of Won-Denominated Loans Drops to 0.44% at Year-End
Year-End Cleanup of Delinquent Loans Leads to Decrease in Delinquency Rate
As the year-end cleanup of delinquent loans continues, the delinquency rate of domestic banks' won-denominated loans, which had been on the rise, has turned downward.
According to the "Status of Domestic Banks' Won-Denominated Loan Delinquency Rates (Provisional)" data released by the Financial Supervisory Service on the 17th, the delinquency rate of domestic banks' won-denominated loans (based on principal and interest overdue by more than one month) stood at 0.44% at the end of December last year, down 0.08 percentage points from 0.52% at the end of the previous month. The delinquency rate had risen consecutively in October and November last year but turned downward in December.
In December last year, the amount of newly incurred delinquent loans (2.5 trillion won) decreased by 300 billion won compared to the previous month (2.8 trillion won), while the amount of delinquent loans resolved (4.3 trillion won) increased by 2.3 trillion won compared to the previous month (2.0 trillion won). The new delinquency rate in December was 0.10%, down 0.02 percentage points from 0.12% in the previous month.
Looking at delinquency rates by sector, both household and corporate loans showed a downward trend. As of the end of December last year, the delinquency rate for household loans (0.38%) fell by 0.03 percentage points from 0.41% at the end of the previous month.
The delinquency rate for mortgage loans (0.26%) decreased by 0.01 percentage points from 0.27% at the end of the previous month, while the delinquency rate for household loans excluding mortgage loans (such as unsecured loans) (0.74%) dropped by 0.08 percentage points from 0.82% at the end of the previous month.
During the same period, the delinquency rate for corporate loans (0.50%) declined by 0.10 percentage points from 0.60% at the end of the previous month. The delinquency rate for large corporate loans (0.03%) remained similar to 0.03% at the end of the previous month, but the delinquency rate for small and medium-sized enterprise loans (0.62%) fell by 0.13 percentage points from 0.75% at the end of the previous month.
An official from the Financial Supervisory Service stated, "The delinquency rate of banks' won-denominated loans fell compared to the previous month due to the increased scale of year-end delinquent loan cleanup," adding, "In preparation for domestic and international uncertainties, the banking sector will be encouraged to activate debt restructuring for borrowers vulnerable to delinquency concerns, while strengthening asset soundness management."
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