Bad loans of South Korean banks rose in April

Business loans classified as SBLs fell slightly.

South Korean banks’ loans classified as substandard or below (SBLs) rose to over $7.95b (KRW10.4t) in the first quarter of 2023, according to data from the country’s Financial Supervisory Service.

This is a 2.97% or KRW0.3t increase compared to the bad loans reported as of end-December.

Compared to March 2022, SBLs are 3.7% or KRW0.4t lower.

The ratio of SBLs to the total outstanding loans stood at 0.41% as of end-March, up 0.01 percentage point (ppt) from the 0.40% as of end-December. Compared to March 2022, the ratio is 0.04 ppt lower from the 0.45% a year earlier. 

Business loans classified as SBLs came in at KRW8.2t in total, falling slightly from KRW8.3t in December 2022.

Household loans classified as SBLs totaled KRW2t, rising from KRW1.7t as of end-December 2022; whilst credit card receivables and loans classified as SBLS totaled KRW0.2t as of end-March.

The ratio of business loans classified as SBLs, meanwhile, declined to 0.5% in March from December 2022’s 0.52%.

(US$1 = KRW1,323.28. Data as of 31 May 2023)