Domestic Banks' Non-Performing Loan Ratio at 0.71% in Q2... Slight Decline

[Asia Economy Reporter Jo Gang-wook] The non-performing loan (NPL) ratio of domestic banks in the second quarter slightly declined. This marks the eighth consecutive quarter maintaining a ratio in the 0% range. NPLs refer to loans overdue for more than three months, where the recovery of the loan principal is uncertain.

According to the Financial Supervisory Service on the 26th, the NPL ratio of domestic banks at the end of the second quarter this year was 0.71%, down 0.06 percentage points from the previous quarter (0.78%). It also decreased by 0.20 percentage points compared to the same period last year (0.91%). The NPL ratio of banks has remained in the 0% range since the end of the third quarter of 2018 (0.96%).

By category, the corporate loan NPL ratio was 0.99%, down 0.11 percentage points from the previous quarter. The NPL ratio for large corporate loans fell from 1.40% in the previous quarter to 1.28%, and for small and medium-sized enterprises (SMEs), it dropped from 0.93% to 0.83%. The NPL ratio for individual business owner loans (0.33%) also decreased by 0.05 percentage points compared to the end of the previous quarter (0.38%).

The household loan NPL ratio was 0.25%, similar to the previous quarter. Mortgage loans (0.19%) decreased by 0.01 percentage points, while other credit loans (0.40%) remained unchanged. The credit card loan NPL ratio (1.17%) fell by 0.15 percentage points compared to the previous quarter.

As of the end of the second quarter, the total amount of NPLs was 15 trillion KRW, down 900 billion KRW from the previous quarter. Among these, corporate loans accounted for 12.8 trillion KRW, representing 85.5% of the total. Household loans amounted to 2 trillion KRW, and credit card loans were 200 billion KRW.

The amount of newly generated NPLs during the second quarter was 3.6 trillion KRW, an increase of 600 billion KRW compared to the previous quarter. Newly generated corporate loan NPLs accounted for 2.7 trillion KRW, up 600 billion KRW from the previous quarter, making up the majority. Newly generated household loan NPLs were 800 billion KRW, similar to the previous quarter.

Banks disposed of 4.5 trillion KRW worth of NPLs in the second quarter. This is 2 trillion KRW more than the previous quarter but 600 billion KRW less than the same period last year.

The loan loss provision coverage ratio of banks was 121.2%, up 10.6 percentage points from the end of last year (110.6%).

This content was produced with the assistance of AI translation services.