Financial Supervisory Service Releases September Delinquency Rates for Won-Denominated Loans at Domestic Banks
Decline Seen in Both Corporate and Household Loan Delinquency Rates
The delinquency rate for won-denominated loans at domestic banks has shifted to a downward trend after three months. This is attributed to a decrease in new delinquencies and the sale of delinquent loans by financial institutions.
According to the "Status of Won-Denominated Loan Delinquency Rates at Domestic Banks (Provisional)" report released by the Financial Supervisory Service on November 28, the delinquency rate for won-denominated loans at domestic banks, based on loans overdue by more than one month as of the end of September, stood at 0.51%. This represents a decrease of 0.10 percentage points from 0.61% at the end of the previous month. However, compared to the same month last year, it has increased by 0.06 percentage points.
The banks’ loan delinquency rate reached its annual peak of 0.64% in May, then dropped to 0.52% in June, rose again to 0.57% in July, and continued to increase for two consecutive months up to this month.
In September, the amount of newly delinquent loans was 2.5 trillion won, a decrease of 400 billion won compared to the previous month. During the same month, the volume of resolved delinquent loans was 4.8 trillion won, an increase of 3 trillion won from the previous month’s 1.8 trillion won.
The Financial Supervisory Service explained that the delinquency rate declined compared to the end of the previous month due to a decrease in newly delinquent loans and an increase in the volume of resolved delinquent loans in September.
By sector, the delinquency rate for corporate loans in September was 0.61%, down 0.12 percentage points from the previous month. The delinquency rate for large corporate loans was 0.12%, a decrease of 0.03 percentage points, while the rate for small and medium-sized enterprises was 0.75%, down 0.14 percentage points.
During the same period, the delinquency rate for household loans was 0.39%, a decrease of 0.06 percentage points from the previous month. The delinquency rate for mortgage loans was 0.27%, down 0.03 percentage points, while the delinquency rate for household loans excluding mortgages (such as credit loans) was 0.75%, a decrease of 0.17 percentage points from the previous month.
An official from the Financial Supervisory Service stated, "The Financial Supervisory Service will continue to encourage banks to maintain sufficient loss-absorbing capacity by promoting the sale of non-performing loans and the expansion of loan loss provisions, in preparation for the potential increase in delinquencies and non-performing loans due to ongoing economic slowdown and both domestic and external uncertainties."
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