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Banks’ bad loans up in Q1 on rise in household loans

May 30, 2023

South Korean banks’ nonperforming loans expanded in the first quarter from three months earlier on a rise in household loans, data showed Tuesday.

Loans classified as substandard or below (SBLs) held by local banks reached 10.4 trillion won (US$7.9 billion) at the end of March, up from 10.1 trillion won three months earlier, according to the preliminary data from the Financial Supervisory Service.

The tally rose for the second consecutive quarter, ending a downward trend that continued for 2 1/2 years thanks to financial assistance provided to overcome economic fallout stemming from the COVID-19 pandemic.

The percentage of SBLs to the total outstanding loans had come to 0.41 percent as of end-March, slightly up from 0.40 percent in the previous quarter.

SBLs taken out by companies amounted to 8.2 trillion won, down from 8.3 trillion won three months earlier, while SBLs taken out by households totaled 2 trillion won, up from 1.7 trillion won.

Meanwhile, banks coverage ratio rose to 229.9 percent in the first quarter from 227.2 percent three months earlier and 181.6 percent a year earlier.

Logo of Financial Supervisory Service (PHOTO NOT FOR SALE) (Yonhap)
Logo of Financial Supervisory Service (PHOTO NOT FOR SALE) (Yonhap)