South Korean Banks Record Sharp Decline in Loan Delinquency Ratio
The Financial Supervisory Service reported that the share of bank loans overdue by at least one month fell 0.1 percentage points from November, settling at 0.5 percent by end-December — snapping a three-month consecutive climb.
Newly delinquent loans during the month totalled 2.4 trillion won (approximately $1.65 billion USD), a figure substantially overshadowed by 5.1 trillion won worth of bad loan write-offs and recoveries that helped drag the overall ratio downward.
The December reading offers a rare reprieve in what has otherwise been a prolonged upward trend. Since bottoming out at 0.2 percent in June 2022, delinquency levels have largely trended higher, weighed down by persistent concerns over South Korea's heavy household debt burden.
Stripping out settled loans, the delinquency rate on new bank lending stood at 0.1 percent in December, a marginal improvement from 0.11 percent the prior month.
A breakdown by loan category showed further easing across the board. The bad loan ratio for corporate lending dropped 0.14 percentage points month-on-month to 0.59 percent, while the household loan delinquency rate edged down 0.06 percentage points to 0.38 percent by the close of December.
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