Bank Non-Performing Loans Hit 8-Year High
Loans that banks have lent to companies and households and have become difficult to recover have approached 19 trillion won (about $13.86 billion). This is the largest amount in 8 years since 2018. Banks wrote off over 6 trillion won in non-performing loans from their books in the second quarter of
Bank non-performing loans in South Korea surged to an 8-year high, reaching 19 trillion won ($13.86 billion). This figure includes over 6 trillion won written off by banks in the second quarter alone, but the overall scale expanded due to newly deteriorated loans exceeding 7 trillion won. As of June, domestic banks' non-performing loans amounted to 18.9 trillion won, up 1.2 trillion won from the previous quarter, the highest since 2018.
The ratio of non-performing loans to total credit stood at 0.63%, the highest since late 2020. Corporate loans made up over 80% of total non-performing loans at 15.2 trillion won, followed by household loans at 3.4 trillion won and credit card receivables at 300 billion won.
While the balance of allowance for bad debts increased by 200 billion won from the previous quarter, non-performing loans rose by 1.2 trillion won, causing the allowance coverage ratio to fall from 187.0% to 142.9%. Expanding the timeline, non-performing loans increased by 3.9 trillion won over 1.5 years, while the allowance decreased by 1.2 trillion won. The allowance coverage ratio fell from 187.0% to 160.3%, 150.4% to 142.9% over the same periods.
Non-performing loan ratios varied among major banks; Hana Bank's ratio increased from 0.35% to 0.48%, and Woori Bank's rose from 0.32% to 0.39%. KB Kookmin Bank's ratio declined from 0.35% to 0.28%. The allowance coverage ratio also fell for Hana Bank from 138.7% to 100.4% and Woori Bank from 179.9% to 132.9%, while it increased for KB Kookmin Bank from 189.1% to 197.3%.
Written by urgent.news from BusinessKorea's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.