In June, the bank loan delinquency rate was 0.42%, a decrease of 0.09%p compared to the previous month.

▲ A promotional banner related to loans is hanging on a bank in Chuncheon, Gangwon Province. [Photo by Gangwon Ilbo], ‘In June, the delinquency rate of domestic bank loans turned downward due to the impact of delinquency bond clearing.’, According to the Financial Supervisory Service on the 20th, as of the end of June, the delinquency rate of domestic bank loans in Korean won (based on delinquency of principal and interest for more than 1 month) was 0.42%, a decrease of 0.09 percentage points from the previous month’s rate of 0.51%.
In June, the scale of delinquency bond clearing reached 4.4 trillion won, an increase of 2.4 trillion won from the previous month (2 trillion won), and the amount of new delinquencies also decreased by 400 billion won to 2.3 trillion won compared to the previous month (2.7 trillion won).
The Financial Supervisory Service stated, “Typically, at the end of a quarter, there is a tendency for delinquency rates at banks to decrease significantly due to the expansion of delinquency bond clearing. In June, the new delinquency rate (0.10%) also slightly decreased compared to the previous month (0.12%).”
Breaking it down by sector, as of the end of June, the delinquency rate for corporate loans was 0.46%, a decrease of 0.12 percentage points from the previous month.
In particular, the delinquency rate for loans to small and medium-sized enterprises decreased by 0.14 percentage points to 0.58%. The delinquency rate for small and medium-sized businesses was 0.58%, and the delinquency rate for individual business owner loans was 0.57%, each decreased by 0.17 and 0.12 percentage points, respectively.
The delinquency rate for loans to large enterprises decreased by 0.01 percentage points to 0.04% compared to the previous month.
The delinquency rate for household loans was 0.36%, a decrease of 0.06 percentage points from the previous month (0.42%). The delinquency rate for mortgage loans (0.24%) decreased by 0.03 percentage points during the same period, and the delinquency rate for household loans excluding mortgage loans (such as unsecured loans) was 0.71%, a decrease of 0.14 percentage points.
The Financial Supervisory Service forecasted that although the delinquency rate decreased as of the end of June, due to increased financial market volatility, delinquencies, especially among vulnerable borrowers, could rise.
The Financial Supervisory Service stated, “We will activate debt restructuring for vulnerable borrowers and enhance soundness management through active delinquency bond clearing. We plan to induce maintaining loss-absorption ability by making sufficient provisions for bad debts.”