The Financial Supervisory Service said on the 27th that the nonperforming loan ratio of domestic banks in the third quarter this year was tallied at 0.57%, up 0.04 percentage point from a year earlier.
On this day, the Financial Supervisory Service (FSS) released the "Status of nonperforming loans at domestic banks." In the third quarter this year, the balance of nonperforming loans at domestic banks was 16.4 trillion won, down 200 billion won from 16.6 trillion won at the end of the previous quarter. By composition, nonperforming corporate loans were 13.1 trillion won, household loans 3 trillion won, and credit card receivables 300 billion won.
Newly occurring nonperforming loans in the third quarter of 2025 totaled 5.5 trillion won, down 900 billion won from 6.4 trillion won in the previous quarter. Compared with 5.1 trillion won a year earlier, it increased by 400 billion won. By sector, new corporate loan NPLs were 3.9 trillion won, down 1 trillion won from 4.9 trillion won in the previous quarter. By item, new NPLs in large corporation loans were 500 billion won, up 100 billion won from 400 billion won in the previous quarter, and new NPLs in small and midsize corporation loans were 3.5 trillion won, down 900 billion won from 4.4 trillion won in the previous quarter. New household loan NPLs were 1.4 trillion won, similar to the previous quarter.
The nonperforming loan ratio for corporate loans was 0.71%, down 0.01 percentage point from 0.72% at the end of the previous quarter. It was up 0.06 percentage point from 0.65% a year earlier. The NPL ratio for large corporation loans was 0.41%, similar to the previous quarter, and down 0.02 percentage point from a year earlier. The NPL ratio for small and midsize corporation loans was 0.88%, down 0.02 percentage point from 0.90% at the end of the previous quarter, but up 0.10 percentage point from a year earlier. Specifically, the NPL ratio for small corporations was 1.06%, improving by 0.05 percentage point from 1.11% at the end of the previous quarter, while the NPL ratio for individual business owners' loans was 0.61%, up 0.02 percentage point from 0.59% at the end of the previous quarter and up 0.13 percentage point from a year earlier.
The nonperforming loan ratio for household loans was 0.30%, down 0.02 percentage point from 0.32% at the end of the previous quarter, and up 0.03 percentage point from 0.27% a year earlier. The NPL ratio for mortgage loan was 0.20%, down 0.03 percentage point from 0.23% at the end of the previous quarter, and up 0.02 percentage point from 0.18% a year earlier. The NPL ratio for other unsecured loans was 0.62%, up 0.01 percentage point from the end of the previous quarter and up 0.09 percentage point from a year earlier. The NPL ratio for credit card receivables was 1.87%, improving by 0.06 percentage point from 1.93% at the end of the previous quarter, but up 0.32 percentage point from a year earlier.
In the third quarter this year, domestic banks disposed of 5.6 trillion won in nonperforming loans, down 900 billion won from 6.5 trillion won in the previous quarter. Compared with 5 trillion won a year earlier, it increased by 600 billion won. By method, sales accounted for 1.8 trillion won, charge-offs 1.6 trillion won, recoveries through collateral disposal 1 trillion won, and loan normalization 1 trillion won, in that order.
During the same period, the allowance for credit losses balance was 27.1 trillion won, down 300 billion won from 27.4 trillion won at the end of the previous quarter. Accordingly, the allowance coverage ratio was 164.8%, down 0.7 percentage point from 165.5% at the end of the previous quarter. It was also down 22.6 percentage points from 187.4% a year earlier. However, the level of provisioning and loss-absorbing capacity remains solid compared to the past.
Financial authorities plan to continue monitoring banks' asset soundness going forward. They will encourage the banking sector's active sales and collateral disposals to clear nonperforming assets, and will seek to bolster preemptive loss-absorbing capacity so that smooth funding can be maintained even as internal and external uncertainties increase. They also plan to parallel guidance on soundness management and support systems to strengthen financial stability.