SEOUL - South Korea witnessed a decrease in the delinquency ratio on loans extended by banks in September, with both corporate and household loan ratios showing a decline. This development indicates an improvement in loan repayments and financial stability in the banking sector.
According to Yonhap News Agency, the delinquency ratio on banks' won-denominated loans stood at 0.39 percent at the end of September, a reduction of 0.04 percentage points from the previous month. However, this figure represents a 0.18 percentage-point increase from the same period last year.
The FSS attributed the month-on-month decrease to a significant rise in resolved loans, which amounted to 3 trillion won in September, up from 1.4 trillion won in August. Despite this improvement, the value of newly overdue loans remained steady at 2.2 trillion won, with the ratio of newly overdue loans holding at 0.1 percent.
The delinquency ratio for corporate loans was reported at 0.42 percent at the end of September, showing a decrease of 0.05 percentage points from the previous month. Similarly, the ratio for household loans decreased by 0.03 percentage points to 0.35 percent.
The FSS emphasized the need for banks to manage risks preemptively, acknowledging that while the end-September delinquency ratio has declined, the ratio of newly overdue loans remains high. This situation necessitates continued efforts to prepare for potential increases in the delinquency ratio in the future and to ensure that banks do not face a shortage of funds.