Delinquencies on Korea's mom-and-pop business loans hit highest level since 2015

SEOUL, November 27 (AJP) - Delinquencies on loans to South Korea’s mom-and-pop businesses rose to their highest level in more than nine years in the third quarter, even as the banking sector’s overall nonperforming loan (NPL) ratio edged down, the Financial Supervisory Service (FSS) said on Thursday.

The NPL rate for personal business loans climbed 0.02 percentage points from the previous quarter to 0.61 percent, the highest since June 2015.

The FSS attributed the rise to a weak economic environment and higher borrowing costs, which have placed growing pressure on small self-employed borrowers.

Across the banking sector, the overall NPL ratio stood at 0.57 percent in September, down 0.02 percentage points from the previous quarter but up 0.04 percentage points from a year earlier. Total NPLs amounted to 16.4 trillion won, a decline of 2 trillion won from June.

Corporate loans made up 13.1 trillion won of the total, household loans 3 trillion won, and credit card loans 300 billion won.

Banks generated 5.5 trillion won in new NPLs during the July–September period, down 900 billion won from the previous quarter but up 400 billion won from a year earlier. Household loan defaults remained at 1.4 trillion won, while corporate loan defaults fell by 1 trillion won to 3.9 trillion won.

* This article, published by Aju Business Daily, was translated by AI and edited by AJP.

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