The fragile firms accounted for 19.6 percent of businesses with total assets of 10 billion won ($8.9 million) or more. They borrowed a combined 150.6 trillion won from financial institutions last year, accounting for 20.1 percent of total corporate loans.

The BOK report said the number of financially troubled companies and their debts have been on a steady decline in recent years thanks to corporate restructuring efforts.

But the portion of feeble small- and mid-sized enterprises hovered over the 20 percent level over the past five years, while that of large businesses dropped to below 15 percent last year.

Also, 25.6 percent of corporate loans were granted to the nearly insolvent SMEs, with 17.8 percent to financially unsound large firms.

Out of the unhealthy companies, an average 7.3 percent were behind on their debt repayments from 2013-15, compared with 0.3 percent of those not at financial risk.

By industry, 8.7 percent of manufacturing companies were delinquent as of end-2016 due mainly to the strict restructuring in the shipbuilding and machinery sectors.

In the non-manufacturing industry, the delinquency rate was 4.4 percent as local shippers and builders went through hard times around 2016. (Yonhap)