Domestic Bank Delinquency Rate at 0.43% in August... Highest in 3 and a Half Years

The delinquency rate on loans at domestic banks rose for the second consecutive month, reaching the highest level in three years and six months.

On the 25th, the Financial Supervisory Service announced that as of the end of August, the delinquency rate on won-denominated loans at domestic banks (based on principal and interest overdue by one month or more) was 0.43%. This represents an increase of 0.04 percentage points from the previous month and 0.19 percentage points from the previous year. The delinquency rate on loans at domestic banks has risen for two consecutive months, marking the highest level since February 2020 (0.43%), three and a half years ago.

By sector, as of the end of August, the delinquency rate on household loans rose by 0.02 percentage points from the previous month to 0.38%. The delinquency rate on mortgage loans increased by 0.01 percentage points from the end of the previous month to 0.24%, while household loans excluding mortgage loans (such as unsecured loans) rose by 0.05 percentage points to 0.76%.

The delinquency rate on corporate loans as of the end of August was 0.47%, up 0.06 percentage points from the previous month. The delinquency rate on large corporate loans was 0.13%, and on small and medium-sized enterprise loans, 0.55%, increasing by 0.01 percentage points and 0.06 percentage points respectively from the previous month. The delinquency rate on loans to individual business owners rose by 0.05 percentage points to 0.50%.

The new delinquency rate in August was 0.10%, up 0.01 percentage points from the previous month. The amount of new delinquencies incurred in August was 2.2 trillion won, an increase of 200 billion won from the previous month, while the amount of delinquent loans resolved was 1.4 trillion won, up 300 billion won.

The Financial Supervisory Service stated that although the delinquency rate at domestic banks remains at a stable level below the long-term average, there is a need to prepare for the possibility of further increases due to the continued high interest rate environment and expanding domestic and international economic uncertainties. A representative from the Financial Supervisory Service said, "We will enhance the consistency of loan loss provisions and guide banks to strengthen soundness management through active resolution of delinquencies and non-performing loans."

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

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