Sour loans giving local banks more of a migraine

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Sour loans giving local banks more of a migraine


The delinquency rate for loans extended by South Korean banks rose in August from a month earlier amid protracted global uncertainties, the financial regulator said yesterday.

The loan delinquency rate for loans extended by 18 local banks stood at 1.54 percent last month, up 0.18 percentage point from the previous month, according to the Financial Supervisory Service (FSS).

The bad loan rate for businesses rose 0.25 percentage point to 1.98 percent last month, with that of household loans gaining 0.08 percentage point to 1.01 percent over the cited period.

The on-month rise came as large local companies delayed their debt repayments, dampened by faltering exports and a sagging property market, the FSS said.

The delinquency rate for loans owed by large firms surged 0.73 percentage point on-month to 2.36 percent in August, while the corresponding figure for smaller firms rose 0.09 percentage point to 1.85 percent, according to the regulator.

Shipbuilders saw their delinquency rate jump 5.63 percentage points to 19.95 percent, with that of builders rising nearly 1 percentage point, FSS data showed.

“Those industries are particularly hit by a global downturn, resulting in deterioration of their financial conditions,” the FSS noted.

In contrast, the delinquency rate for household loans was capped, as the government has beefed up efforts to curb the household debts that have mounted to a record 922 trillion won ($823.2 billion) as of the end of June.

The tallied banks’ outstanding amount of household loans totaled 457 trillion won last month, up 1.5 trillion won from July. Corporate loans reached 616.3 trillion won, up 4.1 trillion won on-month in the same period.

Loans extended to households grew by 700 billion won in August from a month earlier, while businesses increased their loans by 1.2 trillion won over the cited period, according to the regulator.

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