Have 'debt repayment difficulties' been resolved?... Bank overdrafts and other personal loans delinquency rates increased significantly

South Korean banks saw a significant surge in non-performing loans (NPLs) in 2022, with the NPL rate reaching 0.22% by the end of June. This marks the first time that this metric has been verified with such precision. Younger borrowers, aged 20 and below, and older borrowers, aged 60 and above, exhibited particularly concerning levels of NPLs. The younger demographic saw a 0.33% rate, while the older demographic had a 0.37% rate.

The NPL rate for the five major banks - KB Kookmin, Shinhan, Hanara, UIG, and NH Shinhan - increased from 0.18% at the end of last year to 0.22% at the end of June. This represents a 0.04 percentage point rise. The total NPL amount has grown from 39.9 trillion won at the end of last year to 43.3 trillion won by the end of June, a 8.5% increase. This jump in NPLs has been driven by customers who have maxed out their credit limits, resulting in banks not being able to make interest payments, which are then recorded as NPLs.

The total NPL amount held by the five banks reached 43.3 trillion won by the end of June, an increase of 0.33 percentage points from the same period last year. However, the rate of increase in NPLs was far outpacing the increase in total loan amounts. While loan amounts grew by 3.6% to 107.1 trillion won, NPLs surged by 19.4% to 3,750 billion won. This discrepancy highlights the severity of the situation.