Financial Supervisory Service Releases Domestic Banks' NPL Status as of End-March
Total Non-Performing Loans Reach 16.6 Trillion Won
Corporate Loans at 11.7 Trillion Won, Household Loans at 2.8 Trillion Won
The ratio of non-performing loans (NPLs), defined as substandard or below, in the banking sector increased compared to the previous quarter in the first quarter.
According to the Financial Supervisory Service on May 30, as of the end of March 2025, the NPL ratio at domestic banks was 0.59%, up 0.05 percentage points from the previous quarter's 0.54%, and up 0.09 percentage points compared to the same period last year (0.50%).
The Financial Supervisory Service explained, "The NPL ratio at domestic banks rose slightly compared to the previous quarter, mainly due to a decrease in the amount of NPL disposal," adding, "Although the loan loss provision coverage ratio also declined slightly compared to the previous quarter due to the increase in non-performing loans, it remains at a favorable level compared to the past."
As of the end of March, the total amount of non-performing loans stood at 16.6 trillion won, an increase of 1.6 trillion won from the previous quarter's 15 trillion won. Of this, corporate loans accounted for the majority at 11.7 trillion won, followed by household loans (2.8 trillion won) and credit card receivables (300 billion won).
The NPL ratio for corporate loans was 0.72%, up 0.06 percentage points from the previous quarter's 0.66%. For large corporations, the NPL ratio rose by 0.03 percentage points to 0.45% from 0.42% in the previous quarter. The NPL ratio for small and medium-sized enterprises increased from 0.80% to 0.89%, for small corporations from 0.99% to 1.08%, and for individual business owners from 0.52% to 0.60%.
The NPL ratio for household loans was 0.32%, up 0.03 percentage points from the previous quarter's 0.29%. The NPL ratio for credit card receivables also rose by 0.20 percentage points to 2.01% from 1.81% in the previous quarter.
New non-performing loans generated during the first quarter amounted to 6 trillion won, a decrease of 100 billion won from the previous quarter's 6.1 trillion won. Of this, new corporate NPLs totaled 4.5 trillion won, down 100 billion won from the previous quarter's 4.6 trillion won, while new household NPLs increased by 100 billion won to 1.4 trillion won from 1.3 trillion won in the previous quarter.
The amount of NPLs disposed of during the first quarter was 4.4 trillion won, a decrease of 1.1 trillion won from the previous quarter's 5.5 trillion won.
As of the end of March, the balance of loan loss provisions stood at 28.4 trillion won, up 300 billion won from the previous quarter. However, as non-performing loans increased, the coverage ratio for loan loss provisions fell by 16.5 percentage points to 170.5% from the previous quarter.
The Financial Supervisory Service stated, "In response to domestic and external uncertainties that may increase credit losses, we will continue to guide banks to strengthen asset quality management, including the write-off and sale of non-performing loans, and to further expand loss-absorbing capacity by increasing loan loss provisions."
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