Domestic Banks' Delinquency Rate at 0.35% at End of June... Down 0.05%p from Previous Month

At the end of June, the delinquency rate on won-denominated loans at domestic banks stood at 0.35%, down 0.05 percentage points from the previous month. Compared to the same period last year, it rose by 0.15 percentage points.

On the 22nd, the Financial Supervisory Service (FSS) announced that the amount of new delinquencies in June was 2 trillion won, a decrease of 100 billion won from the previous month, while the amount of delinquent loans resolved was 3.1 trillion won, an increase of 1.8 trillion won from the previous month.

The new delinquency rate in June was 0.09%, down 0.01 percentage points from the previous month, but up 0.05 percentage points compared to the same period last year.

By sector, the corporate loan delinquency rate was 0.37%, down 0.06 percentage points from the previous month. The delinquency rate for large corporations was 0.11%, down 0.01 percentage points from the end of the previous month, while the delinquency rate for small and medium-sized enterprises (SMEs) was 0.43%, down 0.08 percentage points from the previous month.

The household loan delinquency rate recorded 0.33%, down 0.04 percentage points from the previous month. The delinquency rate on mortgage loans was 0.22%, down 0.01 percentage points from the previous month, and the delinquency rate on household loans excluding mortgage loans, such as unsecured loans, was 0.62%, down 0.13 percentage points from the previous month.

The FSS explained that although the delinquency rate at domestic banks showed an upward trend in the first half of this year, the increase during the quarter narrowed in the second quarter compared to the first quarter due to expanded delinquency resolution. It also added that, so far, the banking sector’s delinquency rate remains stable compared to the pre-COVID-19 level (0.36% at the end of December 2019) and the monthly average delinquency rate from 2010 to 2019 (0.78%).

However, in preparation for the possibility of a continued rise in delinquency rates due to global economic slowdown and ongoing monetary tightening, the FSS plans to continuously encourage banks to manage soundness by expanding the resolution of delinquent and non-performing loans. An FSS official stated, "We plan to induce banks to enhance their loss absorption capacity by expanding provisions for loan losses."

Financial Supervisory Service, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

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