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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Jisun] During the first half of this year, the five major commercial banks in South Korea (KB, Shinhan, Hana, Woori, NH Nonghyup) collectively disposed of bad loans through sales and write-offs amounting to 3.2 trillion KRW. This represents an increase of over 1 trillion KRW compared to the same period last year.
Amid high interest rates and inflation, economic slowdown has led borrowers to struggle in repaying loans on time, contributing to the banks' decision to clear non-performing loans aggressively.
According to financial reports on July 14, 2024, the five banks' efforts to manage bad loans totaled 3.2704 trillion KRW for the first half of this year. This figure is 1.47 times higher than the first half of last year (2.2232 trillion KRW) and exceeds the latter half of last year (3.2312 trillion KRW).
Banks typically classify loans overdue for more than three months as 'substandard' or worse, and if deemed irrecoverable, these loans are either written off or sold at discounted rates to asset management companies. This process also involves monitoring trends in new non-performing loans.
As of the end of June, the average loan delinquency rate across the five banks was 0.31%, down from 0.39% at the end of May. The average non-performing loan ratio also decreased from 0.34% to 0.29% during the same period. However, small and medium-sized enterprises (SMEs) faced higher delinquency rates, up to 0.56% in May, indicating a tougher situation compared to households (0.31%) and large corporations (0.03%).
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
