The loan delinquency ratio of South Korean banks registered a two-year low in December after resolving massive overdue loans.
This were done ahead of the year-end book closing, according to the Financial Supervisory Service.
The rate of band loans overdue for more than one day came in at 0.89 percent of the total bank loans to companies and households as of the end of December. This represents a reduction of 0.54 percentage points from a month earlier, and is the lowest reading since 0.74 percent was tallied in December 2009.
The December drop came after domestic banks rushed to massively clean up overdue loans ahead of the year-end book closing, according to the FSS. The reduction in new delinquent loans also contributed to the fall in delinquency.
Fresh delinquent loans amounted to 2.3 trillion won or 2.04 billion U.S. dollars as of the end of December, down 1.2 trillion won from a month before, while overdue loans resolved grew 6.5 trillion won on-month to reach 8.2 trillion won last month.
The sour loans in shipbuilding and real estate sectors, which led last year's default rise, contracted last month. The delinquency ratio for loans to shipbuilders plunged 15.18 percentage points on-month to 2.16 percent as of the end of December, with the corresponding rate for project-financing real estate loans dropping 4.30 percentage points to 5.61 percent.
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