The Financial Supervisory Service said on the 17th that creditor banks selected 221 corporations as companies showing signs of distress this year after conducting the regular credit risk assessment. That is nine fewer than a year earlier.
By rating, 104 corporations were rated C, up four from a year earlier, while 117 were rated D, down 13. By size, large corporations totaled 17, up six from a year earlier, while small and medium-sized corporations totaled 204, down 15. Large corporations were defined as those with credit exposure from financial institutions of 50 billion won or more, and small and medium-sized corporations as those with less than 50 billion won.
Looking at the trend in companies showing signs of distress, the number of corporations subject to detailed evaluation stood at 4,482 this year, up 454 from a year earlier. Of these, 902 were large corporations and 3,580 were small and medium-sized corporations.
The number of companies showing signs of distress rose from 160 in 2021 to 231 in 2023, then edged down to 230 in 2024 and 221 this year. Among large corporations, those showing signs of distress numbered 17, up six from a year earlier, while among small and medium-sized corporations the figure was 204, down 15.
Among large corporations showing signs of distress, C ratings totaled three, down one from a year earlier, while D ratings totaled 14, up seven. For small and medium-sized corporations, C ratings totaled 101, up five, while D ratings totaled 103, down 20.
In terms of selection trends, large corporations showing signs of distress increased, but small and medium-sized corporations showing signs of distress decreased, resulting in a slight year-over-year decline in the total number of companies showing signs of distress in this year's regular credit risk assessment.
However, for small and medium-sized corporations, companies showing signs of distress increased year over year in ad hoc assessments. Combining the regular and ad hoc assessments, the number of corporations showing signs of distress this year was 437, up 46 from 391 a year earlier. Of these, C ratings increased by 11 and D ratings by 35. For large corporations, ad hoc assessments are conducted as needed, considering economic and financial conditions, while for small and medium-sized corporations, ad hoc assessments are conducted quarterly.
The increase in companies showing signs of distress is analyzed as the result of a deterioration in financial structure, centered on some marginal corporations, amid a prolonged period of high interest rates. By industry, real estate had the most corporations showing signs of distress at 38, followed by automobiles with 16, wholesale and brokerage with 15, machinery and equipment with 12, rubber and plastics with 11, and electronic components with 10.
Compared with a year earlier, real estate increased by eight corporations, raising its share to 17.2%, and electronic components increased by five, lifting its share to 4.5%. In contrast, rubber and plastics decreased by seven corporations, lowering its share to 5.0%, machinery and equipment fell by six to 5.4%, and automobiles fell by five to 7.2%.
The financial authorities and the banking sector plan to induce swift follow-up measures for companies showing signs of distress. They will support management normalization of these corporations through creditor-led workouts or court receivership and other legal restructuring, and will guide creditor banks to strengthen post-management for corporations that do not apply for workouts or court receivership.