S. Korea banks reduce bad loans

Efforts of South Korean banks to clean up bad loans are paying off.

The ratio of loans classified as substandard or below was 1.32 percent of the total loans extended by banks as of the end of 2012. The figure is 0.04 percentage points down from a year before, according to the Financial Supervisory Service.

The bad loan ratio went up to 1.56 percent in the third quarter.

Bad loans resolved in the last three-month period were 9. 8 trillion won, up from 4.8 trillion won in the third quarter.

The watchdog said it will encourage banks that failed to meet the bad loan ratio target of 13 percent in 2012 to set up and implement plans to clean up bad loans.

As of end-2012, the bad loan ratios for Woori, Kookmin, Korea Development Bank and Industrial Bank of Korea were 1.66 percent, 1.34 percent, 1.48 percent and 1.39 percent each.

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