April Bank Loan Delinquency Rate at 0.37%... Highest in 32 Months

FSS "Delinquency Rate Trend to Maintain for the Time Being"
"Lower Level Compared to Pre-COVID-19"

On the 3rd, the Financial Supervisory Service (FSS) announced that the delinquency rate on domestic bank won-denominated loans (based on principal and interest overdue by more than one month) at the end of April was 0.37%, up 0.04 percentage points from 0.33% at the end of the previous month. This is the highest level in 2 years and 8 months since August 2020 (0.38%).

The amount of new delinquencies in April was 1.8 trillion won, an increase of 100 billion won compared to the previous month, while the amount of delinquent loans resolved (900 billion won) decreased by 1.5 trillion won due to non-implementation of write-offs and sales. The new delinquency rate was 0.08%, similar to 0.08% in the previous month.

By sector, both corporate loan and household loan delinquency rates increased compared to the previous month. The corporate loan delinquency rate (0.39%) rose 0.04 percentage points from 0.35% at the end of the previous month. While the delinquency rate for large corporate loans (0.09%) remained similar to the previous month, the delinquency rate for small and medium-sized enterprise loans (0.46%) increased by 0.05 percentage points.

The household loan delinquency rate (0.34%) increased by 0.03 percentage points from 0.31% at the end of the previous month. The delinquency rate for mortgage loans (0.21%) rose by 0.01 percentage points, and the delinquency rate for credit loans and others (0.67%) increased by 0.08 percentage points.

The FSS viewed that there is no problem with asset soundness. The FSS explained, "The delinquency rate, which had declined compared to the long-term trend due to the drop in the base interest rate and policy support during the COVID-19 period, is showing signs of returning to normal amid the global monetary policy normalization process."

The FSS emphasized that the current delinquency rate level in the banking sector is lower than before COVID-19 (end of January 2020, 0.41%) and significantly lower compared to the long-term historical average (0.78%). The FSS stated, "We will actively encourage soundness management and enhancement of loss absorption capacity, such as expanding write-offs and sales, to ensure that the delinquency rate trend does not become a burden on the financial system."

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