Banks’ bad debt ratio for loans rises in February

The bad debt ratio for loans extended by local lenders rose in February as the economic slowdown and the slumping property markets spurred fresh loan delinquencies, the financial watchdog said yesterday.

Local banks’ nonperforming loans accounted for 1.13 percent of their total lending as of end-February, up 0.06 percentage points from a month earlier, according to the Financial Supervisory Service (FSS). The delinquency ratio for corporate loans stood at 1.38 percent last month, up 0.05 percentage points from the previous month, and the comparable figure for household loans was 0.85 percent last month, also up 0.07 percentage points, the watchdog said.

The data came as the government battles growing household debt in Asia’s fourth-largest economy. As of September 2011, Korea’s total outstanding household debts, which include loans and credit purchases, stood at a record 892.5 trillion won ($786 billion), spawning concerns about increasing household debt. Yonhap