Photo by Markus Winkler via Unsplash.

South Korean banks’ bad loans sees uptick in May

The delinquency rate stood at 0.51%, 0.03ppt higher than in April.

South Korean banks’ won-denominated (WD) loans recorded a higher delinquency rate in May as the number of bad loans from small businesses and individuals rose.

As of end-May, the delinquency rate stood at 0.51%, a 0.03 percentage point (ppt) rise from a month earlier, according to data from the Financial Supervisory Service (FSS).

This is also 0.11ppt higher from May 2023, when the rate stood at just 0.4%.

Delinquency rate is classified as the percentage of loans with principal or interest payments past due by at least 1 month.

The delinquency rate of loans to small and medium enterprises (SMEs) rose to 0.72% from 0.66% in April. 

The delinquency rate of household loan also rose by 0.02ppt to 0.42% in May compared to 0.4% a month earlier.

In contrast, the delinquency rate or loans to large companies fell 0.06ppt to 0.05% in May, from 0.11% in April.

Overall, the volume of resolved loans rose KRW0.5t between April and May, according to the FSS. However, newly delinquent loans grew by KRW0.1t.

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