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S. Korea's loan delinquency ratio rises on arrears by big firms

Xinhua, February 29, 2016 Adjust font size:

Bank loans delinquency ratio in South Korea rose in January due to an increase in arrears by big corporations, financial watchdog data showed Monday.

The delinquency rate of loans extended by commercial banks stood at 0.67 percent as of end-January, up 0.09 percentage points from a month earlier, according to the Financial Supervisory Service (FSS).

Fresh arrears reached 1.8 trillion won (1.5 billion U.S. dollars) in January, far surpassing resolved loans worth 0.6 trillion won.

The delinquency ratio had kept a downward trend since the third quarter of 2012 thanks to record-low interest rate by the central bank.

The Bank of Korea (BOK) cut the benchmark interest rate by a quarter percentage point in March and June last year to an all-time low of 1.5 percent, after lowering it by the same margin in August and October 2014.

The January rebound in delinquency rate came on the back of an increase in arrears among large companies.

The default rate in corporate loans advanced 0.14 percentage points from a month earlier to 0.92 percent as of end-January. The rate for loans to big corporations jumped 0.22 percentage points to 1.14 percent, with the rate for loans to small firms gaining 0.12 percentage points to 0.85 percent.

The rate for construction companies gained 0.20 percentage points to 3.55 percent, with the figure for shipping firms increasing 0.23 percentage points to 1.20 percent.

Household loans' delinquency ratio rose 0.03 percentage points from a month earlier to 0.36 percent at the end of January. From a year earlier, the rate went down by 0.17 percentage points. Enditem