November Bank Won-Denominated Loan Delinquency Rate at 0.60%... Delinquencies Rise Further for SMEs and Unsecured Loans

Bank Loan Delinquency Rate Rises to 0.60% at End of November
SMEs at 0.98%, Unsecured Loans at 0.90%
"Strengthening Bank Asset Soundness Management"

At the end of November last year, the delinquency rate for Korean won loans at domestic banks rose compared to the previous month. In particular, increases in delinquencies among small and medium-sized enterprises and household credit loans are interpreted as a sign that, amid the economic slowdown, the repayment burden on vulnerable borrowers is gradually increasing.

According to the Financial Supervisory Service, as of the end of November last year, the delinquency rate for Korean won loans at domestic banks (based on principal and interest overdue for more than one month) was 0.60%, up 0.02 percentage points from the end of October. Compared to the same period a year earlier, it was 0.08 percentage points higher.

The amount of new delinquencies that occurred in November last year was 2.6 trillion won, which is 300 billion won less than the previous month. The amount of resolved delinquent loans was 1.9 trillion won, an increase of 600 billion won compared to the previous month.

By sector, both corporate loan and household loan delinquency rates increased compared to the previous month.

The corporate loan delinquency rate was 0.73%, up 0.04 percentage points from the end of the previous month. Among these, the delinquency rate for loans to small and medium-sized enterprises rose by 0.05 percentage points to 0.98%, marking the largest increase. This is attributed to the weakened repayment capacity of small and medium-sized enterprises due to the economic downturn.

The delinquency rate for loans to small and medium-sized enterprises was 0.89%, up 0.05 percentage points, while the delinquency rate for loans to large corporations rose by 0.04 percentage points to 0.16%. The delinquency rate for loans to individual business owners also increased by 0.05 percentage points to 0.76% compared to the previous month.

The household loan delinquency rate also increased by 0.01 percentage points to 0.44%. While the delinquency rate for mortgage loans rose only slightly by 0.01 percentage points to 0.30%, the delinquency rate for household loans excluding mortgages, such as credit loans, climbed by 0.05 percentage points to 0.90%, recording the second largest increase after small and medium-sized enterprises.

The Financial Supervisory Service stated that it plans to strengthen asset soundness management at domestic banks through the disposal and sale of non-performing loans, and to ensure sufficient loss-absorbing capacity by encouraging the accumulation of loan loss provisions.