'COVID-19 Illusion' Last Year's Bank Non-Performing Loan Ratio 0.64% 'All-Time Low'

At the End of Last Year, Bank Non-Performing Loan Ratio at 0.64%
Lowest Since Statistics Began... Down 9.4% Compared to Previous Year

[Asia Economy Reporter Oh Hyung-gil] The non-performing loan (NPL) ratio of domestic banks has been recorded at an all-time low. The COVID-19 financial policy support, which simultaneously deferred principal and interest repayments, is evaluated as a factor in the decline of banks' NPL ratios.

According to the Financial Supervisory Service on the 18th, the NPL ratio of domestic banks at the end of last year was 0.64%, down 0.13 percentage points from 0.77% at the end of the previous year. The scale of non-performing loans was 13.9 trillion won, a decrease of 9.4% or 1.4 trillion won compared to the previous year-end.

Corporate loans accounted for 12 trillion won, representing 86.1% of the total non-performing loans, followed by household loans at 1.8 trillion won and credit card receivables at 100 billion won.

Newly generated non-performing loans last year amounted to 12.5 trillion won, down 16.7% or 2.5 trillion won from the previous year. New corporate loan NPLs were 9.3 trillion won, down 18.4% year-on-year, and new household loan NPLs were 2.8 trillion won, reduced by 9.7%. Additionally, the scale of non-performing loan disposals last year was 13.9 trillion won, down 21.7% from the previous year.

The domestic banks' loan loss provision coverage ratio improved by 26.7 percentage points from the previous year-end to 138.8%.

A Financial Supervisory Service official stated, "While newly generated non-performing loans have decreased, the expansion of provision accumulation has increased loss absorption capacity," adding, "Since uncertainties due to COVID-19 persist, we will encourage banks to faithfully accumulate provisions to maintain their loss absorption capacity."

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