South Korean banks’ bad loan ratio hits record low in Q

Ratio of bad loans to total lending came at only 0.62% as of end-March.

The non-performing loan ratio at South Korean banks declined to a record low in Q1, driven by a drop in overdue corporate loans, reports Yonhap, based on data from the Financial Supervisory Service.

The ratio of bad loans to total lending came to 0.62% at the end of the first quarter, down 0.02 percentage point (ppt) from Q4 2020 and 0.16 ppt from Q1 2020, data showed.

This is thanks to overdue lending to companies being lower in Q1. During the first quarter, this only reached $1.6b (KRW1.8t), or KRW700b lower from three months earlier.

Outstanding amount of bad debt amounted to about $12.4b (KRW13.8t) as of end-March, or KRW100b lower compared to Q4 2019.

Despite the improvement, local corporates are still notedly in trouble, with overdue corporate loans totalling $10.9b (KRW11.9t)—that is, 87% of all total non-performing loans as of end-March.

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