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Bad debts in S.Korean banks hit 15-year high on corporate restructuring

Xinhua, June 2, 2016 Adjust font size:

Bad debts among South Korean banks hit the highest in 15 years due to the government-led corporate restructuring in shipping and shipbuilding industries, financial watchdog data showed on Thursday.

Non-performing loans extended by local banks amounted to 31.3 trillion won (26.3 billion U.S. dollars) as of the end of March, up 1.3 trillion won from three months earlier, according to the Financial Supervisory Service (FSS).

It was up 6.6 trillion won from a year ago, marking the largest since the end of March in 2001 when the bad debts recorded 38.1 trillion won.

The sub-standard rate, which gauges the percentage of loans overdue more than three months to the total, stood at 1.87 percent as of end-March, the highest in five years. It was higher than comparable data from the United States at 1.54 percent and from Japan at 1.53 percent.

The higher rate of bad debts came mainly from the government-led corporate restructuring in shipping and shipbuilding industries that had struggled with massive losses and falling orders amid the global economic slowdown.

The sub-standard ratio among shipbuilders and shipping firms reached 12.03 percent and 11.43 percent each at the end of March. The rate for construction companies was 4.27 percent.

The bad debt ratio among big corporations increased 0.31 percentage points from three months earlier to 4.07 percent as of end-March, while the figure for small firms fell 0.03 percentage points to 1.61 percent. Enditem