South Korea NPL ratios still strong despite multi-year lows

Asset quality remains stable.

South Korean non-performing loans (NPL) ratios across all types of obligators remains strong at multi-year lows as asset quality remains stable, according to a Moody’s report.

GDP growth will remain slow throughout the year amidst a decline in trade volumes across Asia Pacific.

Prudential measures on household and personal debt keep asset quality of household loans secure. Small and medium enterprise (SME) loans also remained supported by sufficient liquidity and high collateral and credit guarantees, added Moody’s.

“Money market conditions remain benign as market rates have followed the benchmark rate lower, while the US dollar/Korean won has traded between KRW1,100-KRW1,200 to $1.00. This suggests that capital outflows have been stable despite rising geopolitical tension and supports the credit standing of corporate and financial institutional borrowers and bank asset quality,” the report said.

Both corporate leverage and property prices are positives, with both the debt ratio and interest coverage ratio improving among Korean companies.

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