Lenders see sour debt ratios sweeten

Local lenders’ bad debt ratio fell in the second quarter from three months earlier as they shored up efforts to take soured loans off their balance sheets, the financial regulator said yesterday.

Non-performing loans at 18 local banks totaled 20.8 trillion won ($18.4 billion), or 1.49 percent of their total lending as of end-June, according to the Financial Supervisory Service (FSS).

The figure slid 0.02 percentage point from the previous quarter.

The fall came as the amount of bad debt cleared by the lenders more than doubled to a net 7 trillion won in the April-June period, up from a net 3.3 trillion won three months earlier, the FSS said.

The bad debt ratio for corporate loans fell 0.06 percentage point to 1.84 percent at the end of June, with the corresponding figure for smaller firms declining 0.04 percentage point to 2.31 percent.

The ratio of bad loans for property-related loans, however, jumped 2.13 percentage points on-quarter to 11.22 percent at the end of June, as the real estate market has slumped due to falling housing prices and mounting household debt amid a slowing economy, the FSS noted.

The ratio of non-performing household loans also rose 0.05 percentage point to 0.76 percent, with that for soured mortgage debt climbing 0.03 percentage point to 0.67 percent at the end of the second quarter, according to the regulator.

Yonhap