The Korea Herald


Banks' loan default rate dips to 6-month low in June

By 박한나

Published : July 26, 2011 - 08:59

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South Korean banks' loan delinquency rate fell to the lowest level in six months in June due mainly to a decline in project financing loans, the financial watchdog said Tuesday.

The average delinquency rate of bank loans to companies and households stood at 0.97 percent as of the end of June, down 0.33 percentage point from the previous month, according to the Financial Supervisory Service (FSS).

The rate is the percentage of loans overdue more than one day to their total lending. The June data marked the lowest level since

0.9 percent tallied in December last year, the watchdog added.

The on-month decline came on the heels of increased disposals of project financing loans, the FSS said, adding that banks also beefed up efforts to clean up their balance sheets at the end of the first half.

The default rate of banks' corporate loans fell 0.56 percentage point to 1.19 percent as of the end of last month. The corresponding rate for lending to larger companies reached 0.25 percent, down 0.24 percentage point from the previous month, and that of loans to smaller firms also dropped 0.64 percentage point to 1.43 percent, the FSS said.

The delinquency rate on banks' property project financing loans came to 5.08 percent as of end-June, down 3.32 percentage points from the previous month.

The default rate on banks' household lending slipped 0.04 percentage point to 0.72 percent, it added. (Yonhap News)