The delinquency rate on won-denominated loans stood at 0.69 percent at the end of August, up from 0.63 percent a month earlier and 0.61 percent a year earlier, according to the Financial Supervisory Service (FSS). The reading was the highest since October 2016, when the rate stood at 0.81 percent.
The measure covers loans with principal or interest payments overdue by at least one month.
The regulator attributed the increase partly to corporate delinquencies involving JoongAng Group affiliates that sought corporate rehabilitation or debt workouts in July, along with mounting repayment pressures amid persistently high interest rates.
Newly overdue loans totaled 3 trillion won ($2.27 billion) in August, down 200 billion won from July. Banks resolved 1.5 trillion won in delinquent debt through write-offs and sales, up 100 billion won from the previous month.
The new delinquency rate, which measures loans that became overdue during the month against total lending outstanding at the end of the previous month, remained unchanged at 0.12 percent.
Corporate loans showed further deterioration. Their delinquency rate rose to 0.86 percent in August from 0.78 percent in July.
The rate for loans to large companies climbed to 0.39 percent from 0.36 percent a month earlier. The figure was more than double the 0.15 percent recorded a year earlier.
Small and midsized businesses also faced greater repayment pressure. Their delinquency rate rose to 1.00 percent from 0.91 percent in July, matching the level recorded in May.
The rate for small and midsized corporations increased to 1.10 percent from 1.00 percent, while that for self-employed borrowers rose to 0.86 percent from 0.77 percent.
Household loans showed a smaller increase, with their delinquency rate ticking up to 0.45 percent from 0.42 percent in July.
The mortgage delinquency rate rose to 0.31 percent from 0.29 percent. The rate for other household borrowing, including unsecured credit loans, increased to 0.91 percent from 0.84 percent, its highest level since August 2025.
Despite the increase, the FSS said the overall delinquency rate remained below the pre-pandemic 10-year average of 0.78 percent and was still manageable over the medium to long term.
The regulator said it would monitor banks' compliance with regulations governing the sale and collection of overdue loans, while encouraging debt restructuring to ease repayment burdens on financially vulnerable borrowers.
Meanwhile, the Bank of Korea kept its benchmark interest rate unchanged at 3.00 percent on Thursday.
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