Risky PF loans fall in Q2: watchdog

In the second quarter of the year, outstanding loans extended to risky real estate development projects decreased as a result of sales or recapitalization, according to the Financial Supervisory Service (FSS). At the end of June, 15.1 trillion won (US$11.3 billion) in loans to real estate projects were classified as risky, marking a decline from 16.4 trillion won at the end of March.

This figure represented 9 percent of total exposure by financial institutions to real estate development, which also decreased from 9.6 percent at the end of March and 169.8 trillion won. The watchdog reported that the remaining risky PF loans will undergo restructuring. PF loans have been a persistent issue in the financial market, as a rise in bad loans starting late in 2023 could potentially jeopardize financial institutions and overall market stability.