The delinquency rate for won loans at domestic banks has risen again after a month. As the effect of cleaning up delinquent loans at the end of the quarter diminishes, new delinquent loans have exceeded 3 trillion won, continuing to pose a burden on the soundness of the banking sector.
According to the Financial Supervisory Service on September 22, the delinquency rate for won loans at domestic banks was 0.63% at the end of July, up 0.07 percentage points from the previous month (0.56%). Compared to the same month last year (0.57%), it is 0.06 percentage points higher.
The delinquency rate in the banking sector typically decreases due to concentrated cleanup of delinquent loans at the end of the quarter, followed by a subsequent rise. This year, the delinquency rate fell from 0.67% in May to 0.56% in June, before rising again to the 0.6% range in July.
In July, the amount of new delinquent loans was 3.2 trillion won, an increase of 600 billion won from the previous month’s 2.6 trillion won. In contrast, the amount of delinquent loan cleanup was 1.4 trillion won, a decrease of 3.9 trillion won from the previous month’s 5.3 trillion won. The new delinquency rate also rose to 0.12%, up 0.02 percentage points from the previous month.
The delinquency rate for corporate loans rose to 0.78%, an increase of 0.10 percentage points from the previous month. The delinquency rate for large corporate loans was 0.36%, while the rate for small and medium-sized enterprises was 0.91%, rising by 0.14 and 0.09 percentage points, respectively. The delinquency rate for small corporations was 1.00%, and for individual business loans, it was 0.77%.
The delinquency rate for household loans increased to 0.42%, up 0.02 percentage points from the previous month. The rate for mortgage loans was 0.29%, while household loans excluding mortgages, such as credit loans, stood at 0.84%.
The Financial Supervisory Service explained that the rise in the delinquency rate was due to a decrease in the amount of delinquent loan cleanup and the emergence of new delinquencies resulting from the rehabilitation and workout of some companies. They noted that if market interest rates continue to rise and external uncertainties persist, the upward trend in the delinquency rate may continue.
* This article has been translated by AI.
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