■ Financial Stability Situation by Bank of Korea,
, ‘[Seoul Economy] ‘,
, ‘Recently, the number of vulnerable borrowers among households and self-employed individuals has been increasing, leading to a rising trend in their delinquency entry rates and delinquency continuation rates. There are growing concerns about the risk of an expanding and prolonged financial deterioration, especially among self-employed individuals.’,
, ‘According to the financial stability situation released by the Bank of Korea on the 25th, the delinquency rate among vulnerable household borrowers was 10.48% in the second quarter, continuing the trend from the first quarter (10.9%) in the 10% range. The delinquency rate for vulnerable self-employed borrowers was also at 11.34%, maintaining a high level in the 11% to 12% range since the third quarter of last year.’,
, ‘The rates for newly entering delinquency (delinquency entry rate) and the prolongation of delinquency (delinquency continuation rate) have also risen together. The delinquency entry rate for vulnerable household and self-employed borrowers, which was about 2.5% in 2021, jumped to 3.90% and 4.42%, respectively, at the end of the second quarter this year. While the delinquency continuation rate for household borrowers remained similar to the past at 74.9%, in the case of self-employed individuals, the rate rose to 77.4% for all borrowers and 79.4% for vulnerable borrowers, indicating a distinct prolongation of financial trouble.’,
, ‘The fixation of the delinquency rate for vulnerable borrowers in the double digits is noteworthy, particularly for self-employed individuals, as the delay in economic recovery suggests a high likelihood of prolonged financial deterioration. Moreover, due to the structure where non-bank loans account for a significant portion—60.5% for vulnerable household borrowers and 53.9% for vulnerable self-employed borrowers—there is concern that financial deterioration could rapidly spread to various non-bank sectors.’,
, ‘The trends also vary by age group. Among vulnerable household borrowers, the loan proportion for those in their 20s to 30s is 22.2%, more than twice that of those aged 70 and above (9.8%). On the other hand, due to the characteristic of many starting businesses post-retirement, the loan proportion for self-employed vulnerable borrowers aged 70 and above is 28.7%, while it is 8.7% for those in their 20s to 30s. The Bank of Korea emphasized, “While non-bank sectors generally have good resilience in terms of capital ratio, the financial deterioration among vulnerable borrowers can simultaneously affect several financial institutions,” highlighting the need for proactive credit risk management, such as increasing loan loss provisions.’,
, ‘Additionally, they emphasized the need for policy support to enhance repayment capabilities by supporting the income recovery of self-employed individuals and providing tailored debt adjustments and easing of interest burdens. In this regard, the Bank of Korea mentioned, “The government’s recent supplementary budget initiatives like distributing consumption coupons for livelihood recovery and expanding the New Start Fund are expected to have positive effects in supplementing the income of self-employed individuals and easing their debt burden by reducing delinquency.”’,
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