Loan delinquency rate falls at Korean banks as bad debts are written off

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Loan delinquency rate falls at Korean banks as bad debts are written off

Published: 15 Nov. 2024, 10:36

Signs about a bank's loan programs that were put up on the exterior of a lender in Seoul on Thursday. [YONHAP]

The delinquency rate on loans extended by local banks dropped in September as lenders wrote off massive amounts of soured loans, data showed Friday.

The delinquency rate on banks' won-denominated loans came to 0.45 percent as of the end of September, down 0.08 of a percentage point from a month earlier, according to preliminary data from the Financial Supervisory Service (FSS).

From a year earlier, the reading marks a 0.06 percentage-point increase.

The amount of newly delinquent loans came to 2.5 trillion won ($1.78 billion) in September, down 0.5 trillion won from the previous month. The amount of write-offs of bad loans, on the other hand, swelled to 4.3 trillion won from 1.4 trillion won over the same period.

The delinquency rate on corporate loans stood at 0.52 percent at the end of September, down 0.1 percentage point from a month before, while the rate on household loans also fell 0.04 percentage point to 0.36 percent over the cited period.

The report comes after the country's central bank slashed its key rate by 25 basis points to 3.25 percent in October, marking its first rate cut since August 2021, which the financial regulator earlier said will help reduce interest payments.

The FSS said despite rate cuts around the globe, delinquency rates may increase due to economic uncertainties.

Yonhap