Korean banks’ loan delinquency rate drops to historic low in June

2017.08.02 15:50:42

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Loan delinquency rate of South Korean banks reached an all-time low of 0.43 percent as of June 30 amid prolonged low interest environment.

According Financial Supervisory Service (FSS) on Friday, the delinquency ratio of won-denominated bank loans stood at 0.43 percent as of June 30, down 0.15 percentage point from a month earlier. Compared to a year ago period, it was down 0.28 percentage point.

It is the lowest record since the FSS started tracking related data in 2007. The previous bottom was 0.47 percent at the end of last year.

The loan delinquency rate refers to the percentage of loans with principal or interest payment past due by at least one month.

The bank loan delinquency rate is low even after excluding the impacts from banks’ biannual clearances of bad debts.

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The loan delinquency rates of loans to both companies and households recorded historic low. Delinquency rate of loans to companies reached 0.59 percent - 0.57 percent for large firms and 0.60 percent for small- and medium-sized firms.

Delinquency rate of loans extended to households was 0.25 percent. Reading for mortgage-backed loans was 0.18 percent, replacing the previous record low of 0.19 percent set at the end of last year. The delinquency rate of household loans excluding credit card debt was 0.41 percent.

The historic-low bank loan delinquency rate largely owed to favorable interest rates that have remained low for extended period of time, market experts said.

By Chung Seok-woo

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