Last Month's Financial Sector Delinquent Loans Reach 23.8 Trillion Won... Savings Banks Up 264% in 3 Years

Delinquencies Surge in Secondary Financial Sector Including Savings Banks, Insurance, and Card Companies
Kang Min-guk Calls for Comprehensive Measures from Financial Authorities

This year, delinquency amounts have shown a sharp increase mainly in the secondary financial sector, including savings banks, card companies, and insurance.

On the 24th, according to the 'Domestic Financial Industry Loan and Delinquency Scale' submitted by the Financial Supervisory Service to the office of Kang Min-guk, a member of the National Assembly's Political Affairs Committee from the People Power Party, the delinquency scale in the financial sector (banks, savings banks, life insurance, cards) was recorded at 23.8 trillion KRW (1.302 million cases) as of the end of last month.

The delinquency scale in the financial sector has increased from 7.8 trillion KRW in 2021 to 10.5 trillion KRW in 2022, and 16.9 trillion KRW in 2023. After surpassing 20 trillion KRW at the end of last year, the upward trend has continued this year as well.

By industry, the bank delinquency scale was 12.7 trillion KRW at the end of last month, a 19.8% increase compared to 10.6 trillion KRW at the end of last year. Corporate delinquencies amounted to 8.5 trillion KRW, and household delinquencies were 4.2 trillion KRW.

The delinquency scale in the savings bank sector was 9.1 trillion KRW, up 9.6% from 8.3 trillion KRW at the end of last year. Corporate delinquencies were 6.9 trillion KRW, and household delinquencies were 2.1 trillion KRW. The delinquency amount in the savings bank sector surged 264% over about three years from 2.5 trillion KRW at the end of 2021. This is the fastest growth rate among all financial sectors during the same period. The delayed resolution of real estate project financing (PF) defaults caused the delinquency increase to persist. However, since the savings bank sector recognizes a loan as delinquent even if it is overdue by just one day, there was also a temporary increase in delinquency scale immediately after the Lunar New Year holiday (January 25?30).

The delinquency scale in the life insurance sector was 500 billion KRW, a 25% increase compared to 400 billion KRW at the end of last year. Corporate delinquencies were 100 billion KRW, and household delinquencies were 300 billion KRW.

Annual Domestic Banking Sector Loan and Delinquency Status. Provided by the Office of Assemblyman Kang Min-guk

The delinquency scale of specialized card companies was 1.5 trillion KRW, a 15.4% increase compared to 1.3 trillion KRW at the end of last year. Corporate delinquencies were 200 billion KRW, and household delinquencies were 1.3 trillion KRW.

Assemblyman Kang Min-guk said, “Since the delinquency scale of loans in the financial sector has not decreased but increased for both households and corporations this year, active preparation by financial authorities is necessary. The financial authorities should regularly conduct on-site inspections of financial sectors with rapidly growing household loans, promote debt restructuring for borrowers with concerns about corporate loan delinquencies, and prepare comprehensive measures to strengthen financial companies’ asset soundness management.”