FSS Releases 2024 Status of Non-Performing Loans at Domestic Banks
At the end of last year, the scale of new non-performing loans (NPLs) at domestic banks was 14.8 trillion KRW, similar to the third quarter of last year (14.5 trillion KRW). This represents an increase of 2.3 trillion KRW compared to the end of 2023. The rise was largely due to an increase in corporate loan NPLs.
On the 25th, the Financial Supervisory Service (FSS) announced the 'Status of Non-Performing Loans at Domestic Banks as of the End of 2024' containing this information.
As of the end of December 2024, the total amount of NPLs stood at 14.8 trillion KRW, an increase of 300 billion KRW from the previous quarter (14.4 trillion KRW). The breakdown was 11.7 trillion KRW in corporate loans, 2.8 trillion KRW in household loans, and 300 billion KRW in credit card receivables.
During the same period, the balance of loan loss provisions was 27.8 trillion KRW, up 600 billion KRW from the end of the previous quarter (27.2 trillion KRW). The increase was due to expanded provisioning. Accordingly, the loan loss provision coverage ratio rose by 0.3 percentage points compared to the previous quarter.
Among these, newly generated NPLs amounted to 5.8 trillion KRW, an increase of 700 billion KRW from the previous quarter (5.1 trillion KRW).
New corporate loan NPLs were 4.3 trillion KRW, up 600 billion KRW from the previous quarter (3.7 trillion KRW). Specifically, large corporations accounted for 600 billion KRW, increasing by 200 billion KRW from the previous quarter (400 billion KRW), while small enterprises accounted for 3.8 trillion KRW, up 500 billion KRW from the previous quarter (3.3 trillion KRW).
New household loan NPLs were 1.3 trillion KRW, an increase of 100 billion KRW from the previous quarter (1.2 trillion KRW). During the fourth quarter of 2024, the amount of NPLs resolved was 5.6 trillion KRW, up 600 billion KRW from the previous quarter (5 trillion KRW).
The NPL ratio of domestic banks (0.53%) remained similar to the end of the previous quarter (0.53%). Although this is lower than the pre-COVID-19 level (0.77% at the end of 2019), the loan loss provision coverage ratio (187.7%) decreased by 26.3 percentage points compared to the end of the previous year (214.0%).
The FSS stated, "Given the ongoing domestic and international uncertainties such as delayed economic recovery and policy uncertainties in major countries, we will strengthen asset soundness management through the disposal and sale of NPLs." It also added, "We will encourage the expansion of loan loss provisions to prepare for an increase in credit losses."
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