January Bank Loan Delinquency Rate 0.31%... Up 0.04%p from Previous Month

Delinquency Rate of Large Corporate Loans Rises by 0.09%p MoM Due to Ssangyong Motor Rehabilitation Filing

[Asia Economy Reporter Kwangho Lee] At the end of January, the delinquency rate of domestic banks in South Korea rose by 0.04 percentage points compared to the previous month. This marks the first increase in the bank delinquency rate in four months.

According to the Financial Supervisory Service on the 10th, the delinquency rate for won-denominated loans (based on principal and interest overdue for more than one month) at domestic banks stood at 0.31% at the end of January.

This is an increase of 0.04 percentage points from the end of the previous month, marking a rise for the first time in four months since October last year. Compared to the same period last year (0.41%), it decreased by 0.10 percentage points.

In the market, although the January delinquency rate remains at a low level, there are concerns that this is a visual illusion caused by reduced borrower burdens due to financial support during the COVID-19 pandemic. In particular, some opinions suggest that, in light of the recent rise in market interest rates, it is necessary to closely monitor future delinquency rates.

The amount of newly occurred delinquencies in January was 1.3 trillion won, an increase of 400 billion won compared to the previous month. The amount of delinquent loans resolved was 500 billion won, a decrease of 1.6 trillion won from the previous month.

By borrower type, the delinquency rate for corporate loans was 0.39%, up 0.05 percentage points from December last year. The delinquency rate for large corporate loans (0.36%) rose by 0.09 percentage points from 0.27% at the end of the previous month, and the delinquency rate for small and medium-sized enterprise loans (0.40%) increased by 0.05 percentage points during the same period. The rise in the delinquency rate for large corporate loans is attributed to an increase in delinquent loans following Ssangyong Motor’s filing for rehabilitation proceedings.

For household loans, the delinquency rate for mortgage loans (0.14%) remained similar to the previous month. The delinquency rate for household loans such as unsecured loans (0.37%) increased by 0.04 percentage points compared to the previous month.

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